Opec has raised its forecast for world oil demand growth slightly but says fuel consumption may not return to levels seen before the global economic slowdown, even if growth recovers. The Organisation of the Petroleum Exporting Countries' monthly report on Wednesday raised its estimate for 2010 oil demand growth to 750,000 barrels per day (bpd) compared with its projection of 700,000 last month.
It said most signs pointed towards gradual growth in fuel consumption, but there were risks to the downside. "A potentially weak economic recovery along with higher prices are two main factors that may dampen world oil demand in the coming year," the report said. Opec said changes in government policy and behaviour could erode demand for fuel, especially in sectors such as transportation. "Even if the expected economic recovery materialises, it remains to be seen whether demand would be able to return to pre-crisis levels."
Demand for Opec's own crude would be 28.51 million bpd in 2010, up 110,000 bpd from its previous estimate, based on expectations of higher world demand and steady non-Opec supply. Opec is the second major forecaster to lift its demand estimates this week. On Tuesday, US government agency the Energy Information Administration increased its 2010 world oil demand growth forecast to 1.26 million bpd.
The International Energy Agency (IEA) will complete this week's forecasting with its report on Thursday, two days after releasing its annual World Energy Outlook. The IEA, adviser to 28 industrialised countries, said in Tuesday's report that it expected world oil demand to rise 1 percent a year to 105 million bpd by 2030, from around 86 million bpd in 2007.
Since September 2008, Opec has been holding down its production as the recession eroded demand and pressure oil prices. The group agreed at a September 9 meeting to keep supply curbs unchanged at 4.2 million bpd. However, Opec said in its report on Wednesday that its own production was rising, indicating that a recent climb in oil prices had encouraged members to loosen compliance.
Oil hit a record at nearly $150 a barrel in July last year. It then collapsed to less than $33 last December, but has since recovered to around $80. In October, supply from the 11 Opec members subject to output targets - all except Iraq - rose to 26.52 million bpd, Opec said.
That cut compliance with output curbs to 60 percent from 61 percent in September. The surge in prices this year led some within Opec to raise the possibility of an output increase at the group's December meeting, if the rally continued.
A senior Gulf source told Reuters on Tuesday in China that Opec was still deciding whether to adjust crude output next month but the source so far saw a "balanced" market. Non-Opec supply was expected to rise to 360,000 bpd in 2010, Opec said, as it edged up its forecast by 10,000 bpd from last month. Opec said it expected Brazil to have the highest oil output growth in 2010.