Opec on Friday cut its forecast for global oil demand growth in 2008 for the third time this year, the latest sign that record-high oil prices are slowing consumption. The exporter group also said that it is pumping more than forecast demand for its oil, and that the current production rate combined with extra supply from Saudi Arabia should lead to rising inventories in the third quarter.
World oil demand will rise by 1.10 million barrels per day (bpd) this year, 60,000 bpd less than the previous forecast, Opec said in its Monthly Oil Market Report for June. The previous reductions were in May and February. "The slow US economy along with current oil prices will have its effect on oil demand not only in the US but across the OECD countries in the second half of this year," the report by Opec economists said. "China, the Middle East, Latin America and India are expected to show healthy growth in oil demand for the remainder of the year."
The report reaffirms Opec's view that consumers have enough oil and that factors beyond oil supply and demand are sending prices to all-time highs. Crude oil hit a record $139.12 a barrel a week ago.
Some consumer countries, such as the United States, say current prices reflect a tight balance between supply and demand. The US this year has been urging Opec to raise output. But the Organisation of the Petroleum Exporting Countries says factors like the weakness of the US dollar, political tension and speculation are leading the market higher. "Current price levels do not reflect supply and demand realities," Opec said.
Producer and consumer countries will meet on June 22 in Jeddah, Saudi Arabia, to discuss the reasons for the jump in prices, Opec said. But the meeting is not expected to lead to an easy fix.
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