Opec slashed its forecast for growth in oil demand next year in response to worsening economic conditions, giving ammunition to members pushing for a cut in production at next week's meeting in Cairo. The group said on Monday the world's appetite for oil will grow by 500,000 bpd next year, which represented a downwards revision of 300,000 bpd compared to last month's forecast. Oil demand this year grew 290,000 bpd, the report said, a decrease of 260,000 bpd compared to last month.
"The fall in prices might help fourth-quarter oil demand to some degree but is not anticipated to overcome the affects of the economic downturn," the report said. In an unusual twist for Opec, the group's prediction for the amount of crude it will need to supply next year exceeded the estimate by the International Energy Agency, a group that represents the interests of consuming nations and often urges Opec to forgo production cuts.
Opec said the world will need 30.9 million bpd of its crude next year, compared to the IEA's estimate of 30.6 million bpd. If Opec follows through on its planned move to cut 1.5 million bpd of production from the 32.2 million bpd it pumped in September, it will be producing less oil than it says is needed to balance the market. But Raja Kiwan, an analyst for PFC Energy based in Dubai, said the data corresponded to the actual cut likely to come out of last month's announcement.
"This call looks about right with what they just announced," he said. "When they make a 1.5 million bpd announcement, they assume about 70 to 80 per cent compliance." email@example.com