VIENNA, 17 August 2006 — OPEC has lowered its estimate for world oil demand in 2006 due to slowing economic growth, the cartel said in a report yesterday. It said demand was now expected to grow by 1.3 million barrels per day (bpd) to average 84.5 million bpd, a downward revision of 80,000 bpd from last month’s figure. This was due to “an unexpected decline in OECD consumption in the second quarter of this year.” The OECD zone comprises 30 leading economies, including the US, Japan and Western Europe.
Issuing its monthly report for August, the Organization of Petroleum Exporting Countries added: “North American oil demand growth for 2006 was revised down by 40,000 bpd from the previous month.” The 11-nation grouping, which produces over a third of the world’s crude, said however that it had raised its estimate for demand for OPEC oil due to “lower than expected non-OPEC supply growth.” Non-OPEC supply was expected to average 51.1 million bpd in 2006, representing an increase of one million bpd compared with 2005 but a downward revision of 234,000 bpd versus the last assessment.
This was mainly due to “lower production from the US (Alaska), Canada and Norway.” OPEC production in July stood at 29.5 million bpd, a decrease of 0.2 million bpd from the previous month, the OPEC report said.
“The estimated demand for OPEC crude in 2006 is expected to average 29.1 million bpd, representing an upward revision of 0.2 million bpd versus the previous month,” the report said.
The overall trend, however, is that global economic growth is slowing. “Second-quarter GDP data confirmed a reduction in the growth rate of the world economy despite a significant improvement in the euro zone.” OPEC said.
It said second-quarter growth in Japan had fallen to 0.8 percent “as a result of a decline in public investment and stagnation in exports.”
In the United States, “following a very strong start to the year, the US economic growth moderated to 2.5 percent in the second quarter. OPEC added that “the world economy is forecast to grow by 4.2 percent next year, compared to 4.8 percent in 2006.”
But for China, “oil demand growth was revised up by 40,000 bpd due to the unexpected strong demand in the second quarter.” “In 2007, world oil demand growth is forecast at 1.3 million bpd or 1.5 percent, unchanged from the previous month, with China and the Middle East expected to be the leading growth regions,” the OPEC August report said.
The Vienna-based OPEC had said in a statement last week that it was confident that oil supplies were sufficient despite several events that have pushed up oil prices.
“The organization remains confident that the world is still adequately supplied with oil and that no shortage will occur,” OPEC said.
OPEC said yesterday that “crude oil volatility appears to have subsided in the last year due to a number of positive developments such as ample supplies, rising OPEC spare capacity, ample strategic reserves and comfortable commercial crude oil inventories, which are now at 20-year highs.”
