OPEC Cuts 2012 Oil Demand Forecast as Global Recovery Falters
February 10, 2012, 7:17 AM ESTBy Grant Smith
Feb. 9 (Bloomberg) -- The Organization of Petroleum Exporting Countries cut its forecast for global oil demand in 2012 as the economic recovery struggles to gain momentum.
The group’s Vienna-based secretariat reduced its estimate of consumption for this year by 120,000 barrels a day, to 88.76 million a day, in its monthly market report today. That means oil demand growth will slow to 900,000 barrels a day in 2012 from 1 million last year. OPEC’s output levels are exceeding requirements by almost 5 percent, data from the report show.
“Downside risks prevail,” OPEC said. “Worries about the U.S. economy along with EU debt concerns are adding to the uncertainties impacting world oil consumption this year.”
Demand growth will slow as the euro zone fights to contain its debt crisis, the U.S. strives to reduce unemployment levels and expansion cools in emerging economies, according to OPEC. Brent crude futures have gained 10 percent this year, trading today at $118 a barrel, as those economic concerns are balanced by the risk that tensions between Iran and the west will lead to a supply disruption.
While the report made no reference to the European Union embargo imposed on imports of Iranian oil last month, OPEC said prices of higher-sulfur, or sour, blends will be supported as ’’geopolitical factors’’ constrain supplies. Much of Iran’s oil output is sour.
The International Energy Agency, an adviser to consuming- nations based in Paris, will release its monthly report on supply and demand levels in 2012 tomorrow.
Exceeding Demand
OPEC’s 12 members are pumping about 1.35 million barrels a day more than consumers need in the first quarter, data from the report showed. OPEC produced 30.9 million barrels a day in January, compared with estimated requirements of 29.55 million, according to the report.
The group’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Those countries will need to provide an average of 30 million barrels a day this year, according to the report. That’s 100,000 a day less than estimated last month, and in line with a production target decided at the group’s most recent meeting in December. The organization is next scheduled to meet in June.
OPEC made a “minor downward revision” to forecasts for production from outside the organization in 2012. Non-OPEC nations, such as the U.S., Russia and Canada, will raise output by 680,000 barrels a day this year to 53.07 million, OPEC said.
--Editors: John Buckley, Raj Rajendran
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
