The OPEC oil cartel today held steady its forecast for world oil demand growth this year, but warned that rising prices could dampen global consumption.
'Should higher international oil prices persist, then this might put more weight on the downward risk' to global oil demand,' the Organisation of Petroleum Exporting Countries said in its latest monthly oil market report.
This 'risk might be translated into a reduction of current growth by 200,000 barrels per day (bpd),' OPEC's report added.
OPEC said it expected global oil demand to increase by 1.59% or 1.38 million barrels a day to 88.14 million in 2011. That is little changed from the cartel's previous forecast for an increase of 1.63%.
'A volatile oil market is making future oil demand estimates hard to manage,' OPEC said. 'Many variables have been affecting oil demand worldwide.
The Japanese earthquake and economic uncertainty in the US are keeping oil demand estimates continually in an adjustment mode and are imposing a downside risk for the year's forecasts,' it said.
The devastating earthquake and tsunami in March had caused oil demand to plunge in Japan in March and April, and it is forecast to worsen in May and June. In the US, too, data showed much weaker oil consumption than anticipated.
'China's economy, on the other hand, is roaring ahead of all expectations' and that would help partially offset the weaker growth in the US, the report said. 'That said, it is too early to alter the existing forecast for world oil demand as the risks are nearly balanced with regard to upward and downward movements,' OPEC added.
Meannwhile, oil prices slipped below $101 a barrel today as a stronger dollar and expectations of increased output from Saudi Arabia overshadowed strong crude demand in China.
Benchmark oil for July delivery was down $1.03 to $100.90 a barrel in electronic trading on the New York Mercantile Exchange. The contract had gained $1.19 to settle at $101.93 yesterday.
In London, Brent crude for July delivery was up 24 cents to $119.81 a barrel on the ICE Futures exchange.
In a surprising decision, OPEC decided this week not to increase oil production but Saudi Arabia and a few other oil-producing nations are expected to boost exports anyway.
