VIENNA, 21 January 2006 — Worldwide demand for crude oil is expected to rise by 1.9 percent in 2006 to 84.8 million barrels per day (bpd), OPEC said in a report yesterday.
This estimate is down slightly from a December prediction by the Organization of Petroleum Exporting Countries that foresaw demand rising to 84.9 million bpd.
The report, published shortly before a Jan. 31 meeting of the 11-member organization, came as Iran called for a reduction in oil production this year.
OPEC’s estimate for world oil demand in 2005 has been revised to 83.2 million bpd, with growth down from December 2005 estimates but up 1.1 million bpd or 1.4 percent compared to 2004.
OPEC said the economy would still be strong in 2006 and worldwide growth, estimated at 4.3 percent, would lead to higher oil consumption in all major regions except for the part of Europe west of Russia.
Demand in industrialized countries is expected to increase by 700,000 bpd, or 3.2 percent, while demand in China is to jump six percent, accounting for about a fourth of the overall increase, the report said.
“It remains unclear whether this solid start to the year will be maintained throughout 2006,” the report said however, adding “supply fears in West Africa and rising geopolitical tensions in the Middle East” were putting pressure on crude prices. OPEC said the US economy was “a particular cause for concern” as “any retrenchment by the American consumer could have a significant impact on Asian growth.”
The average price per barrel for oil, as determined by OPEC’s “reference basket” was $50.64 in 2005, up 40 percent from the previous year, according to OPEC.
“Despite unseasonably warm weather in the northern hemisphere, the basket continued its upward trend in the first half of January to average $56.82” per barrel, the report said.
Yesterday in New York, the price for crude to be delivered in February was just three dollars below its record high of $70.85. Brent crude in London passed the $66 mark for the first time since September, coming close to the record $68.89 it reached last August.
Citing secondary sources, OPEC, which supplies about 35 percent of the world’s oil consumption, said it had produced an average 29.82 million bpd in December compared to 29.99 million bpd the previous month.
Platts, an energy information service, recently estimated OPEC production for December at 29.8 million bpd.
The organization said demand for OPEC crude in 2006 would remain unchanged at 28.7 million bpd while production in non-OPEC countries was foreseen at 51.5 million bpd. This was down from a previous estimate of 51.6 million bpd, but up 1.4 million bpd compared to 2005.
Oil markets are particularly nervous at the moment, due both to supply fears and concern about political instability.
Meanwhile, there are questions about production in both Iran and Nigeria.
Iran asked OPEC yesterday to reduce the cartel’s oil production quota by one million bpd from April, according to Tehran’s OPEC representative.
In Nigeria, the world’s sixth largest exporter of crude oil, the oil industry’s two main unions told employees to stop working if violence continued in the Niger delta.
