OPEC is cautious over oil demand

Slowed-growth forecast is at odds with more optimistic views offered by industrialised countries.

OPEC has offered a cautious forecast of next year's global oil needs, drawing a contrast with the more optimistic views offered by the industrialised countries. World oil demand will expand by slightly more than 1 million barrels per day (bpd), OPEC said yesterday in its first forecast for next year. That represents growth of 1.2 per cent from a lower 2010 base than the rival forecasts.

Slow growth means prices are unlikely to rise significantly, analysts say, and reduces the likelihood that OPEC will be able reactivate all of the spare pumping capacity it made idle in late 2008 without oversupplying the market. The low projections for growth in oil demand are "reflecting continued caution about the pace of the global economic recovery", OPEC said. "The wide range of forecasts for oil demand and non-OPEC supply across the industry reflects the high level of uncertainty regarding the needs of the market in the coming year."

OPEC's forecast comes just two days after the International Energy Agency (IEA), a Paris-based group that represents the interests of major oil importers, predicted world oil consumption next year will grow by 1.3 million bpd, or 1.6 per cent. The IEA saw consumption growth slowing significantly from this year, for which it had forecast a rise of 1.8 million bpd, and predicted oil prices will remain stable next year.

The US government's Energy Information Agency, the third major source of official forecasts, sees world consumption growing by 1.5 million bpd next year. OPEC took a little-concealed shot at its rivals yesterday: "If the past is a good guide, our initial projections are likely to be revised over the coming months, but by less than other institutions". cstanton@thenational.ae