Citing weaker economic recovery in key industrialised nations and the US summer driving season, which have negative impacts on oil demand, the 12-member Oganisation of Petroleum Exporting Countries (OPEC) , suppliers of about a third of world’s crude has slashed its global oil demand forecasts for 2011 and next year.
In its September oil market report, the group lowered its world oil demand forecast by 150,000 barrels per day for 2011 and by 40,000 barrels per day for 2012 as according to it, the weaker global economic recovery had resulted in uncertainty for demand growth in 2012.
The group also said in 2012, the demand for its crude is expected to average 30 mb/d, up 0.1 million barrels per day (mbpd) from 2011 and 0.1 mbpd lower than in the previous assessment.
“World oil demand growth in 2011 has been revised down by 0.15 mb/d to now stand at 1.1 mb/d. The downward adjustment has been due to a weaker-than-expected driving season in the US and the ongoing sluggish economic performance in the OECD. Oil demand in China has also been weaker than expected in the typically peak-demand third quarter. Ongoing economic uncertainties have also impacted the forecast for oil demand growth in 2012, which has been revised marginally lower to now stand at 1.3 million barrels per day” OPEC said in the report.
“The weaker economic recovery is negatively impacting oil demand. The global demand growth forecast for 2011 has been revised down by 0.3 mb/d since the start of this year to stand at 1.1 mb/d. The US summer driving season missed its peak, sliding by two percent year-to-date compared to the same period last year. The Organisation of Economic Cooperation and Development (OECD) economic slowdown has negatively affected oil demand in China, while India oil consumption has been dampened due to measures aimed at limiting the overheated economy in the country.
“In the third quarter, Chinese oil demand growth is estimated to shrink by 0.2 mb/d versus the last assessment. Looking ahead, the perception of market tightness and worries of supply shortages in the fourth quarter appear to be easing. The increasing risk of the global economic slowdown is negatively impacting industrial sectors”, the report added.
OPEC further noted that after experiencing a gain in July, its Reference Basket dropped in August by $5.30 or 4.7percent, the second largest percentage drop since the 9.5percent decline in May 2010.
“Within the OPEC Reference Basket, all components decreased, with African crudes leading the losses. Nigerian Bonny Light crude lost more than $7, while Es-Sider, Saharan Blend and Girassol fell by more than $6. A number of unsold September sweet cargoes from Nigeria, as well as expectations that Libya would soon resume output, helped to limit the rebound in prices. During the second half of the month, African crudes rose, supported by healthy refinery margins in Europe and the Bonny Light force majeure declaration which limited Nigerian crude supply”, the group said.
