LONDON, 18 April 2004 — The OPEC oil group on Friday raised forecast demand for its crude oil this year, expecting China’s economic expansion to push world consumption growth to a four year high. In a monthly report, OPEC’s Vienna-based secretariat raised the forecast full-year 2004 demand for its crude oil by 230,000 barrels per day (bpd) to 26.17 million bpd.

Oil prices are bubbling near 13-year peaks, driven by rising Chinese demand, low US gasoline inventories and concern that violence in the Middle East could disrupt oil supplies.

OPEC raised the forecast second quarter demand on its crude by 100,000 bpd to 24.86 million bpd, and lifted the third quarter “call” by 110,000 bpd to 25.96 million bpd. The biggest jump was in the forecast fourth quarter demand which rose by 600,000 bpd to 27.12 million bpd to account for stronger Chinese growth.

Some analysts say that prices are so high in part because OPEC and other forecasting organizations such as the International Energy Agency (IEA) have been underestimating world demand. “Despite the recent run of revisions, demand may still be being underestimated, non-OPEC supply overestimated and OPEC production overstated,” said Barclays Capital in a report. “The global market is probably considerably tighter than most balances are indicating,” Barclays Capital added.

The IEA, the West’s energy watchdog, sees the call on OPEC’s oil this year at 25.9 million bpd, 270,000 less than OPEC’s own estimate.

OPEC estimated world oil inventories rose by 1.38 million bpd in the first quarter 2004, lower than the IEA’s estimate of a 1.8 million bpd stock build.

OPEC’s report also said estimated oil organization’s production rose in March by 370,000 bpd to 28.30 million bpd, led by a 445,000 bpd jump in Iraq’s output as it opened new export outlets. Output from the 10 OPEC members with quotas fell by just 75,000 bpd to 25.9 million bpd — some 1.4 million bpd above the formal ceiling in place in March. OPEC pledged in mid-February to cut back production but high prices have given them little incentive to enforce the cuts.