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OPEC ups estimate for oil demand growth despite world economic woes
By Michael Adler
AFP
VIENNA
Petroleumworld.com 08 15 07
OPEC has slightly increased its estimate for world oil demand growth in 2007 despite current economic turmoil, the powerful cartel said in a report Tuesday.
"World oil demand growth in 2007 is forecast at 1.3 million barrels per day (bpd), or 1.5 percent, slightly higher than the estimate for last month, reflecting additional oil needs for Japanese power plants," the Organization of Petroleum Exporting Countries said in its monthly report.
UN inspectors said last week that the world's largest nuclear power plant in Japan will be closed for months, after an accident there on July 16.OPEC noted that "over the last four weeks, prices for benchmark WTI (West Texas Intermediate -- the US benchmark) crude oil have exhibited extreme volatility," as the world economy has experienced stock market and other economic fluctuations.
" There is no doubt that the above uncertainties have clouded the outlook for oil demand," OPEC said.
It said US economic problems such as the "recession in the housing sector, in particular the subprime mortgage market" have precipitated "fears of a global economic slowdown."
In addition, "OECD oil demand, affected by the warm winter, led to a decline in oil consumption in both Europe and the Pacific."
But "non-OECD oil demand was as strong as expected. Booming economies pushed oil demand up by 3.5 percent or 1.22 million bpd, year-on-year, in the first half of 2007. China, the Middle East and India accounted for the largest share of oil demand," OPEC said.
It said however that demand for OPEC crude would drop slightly in 2008, "expected to average 30.8 million bpd, representing a decline of 239,000 bpd from the current year," in its monthly report for August.
Oil prices were weaker in Asian trade Tuesday on continued worries that US energy demand will eventually be hit by financial market turbulence, dealers said in Singapore.
At 10:20 am (0220 GMT), New York's main contract, light sweet crude for September delivery fell 10 cents to 71.52 US dollars per barrel from 71.62 dollars in late US trades Monday.
Brent North Sea crude for September delivery was eight cents lower at 70.15 dollars.
" Investors are cautious given current financial market turmoil," said Societe Generale.
" Market fundamentals remain supportive but the sub-prime crisis is still a key issue," it said.
Analysts at US investment bank Goldman Sachs said that the recent declines in oil prices, which were driven by speculators exiting the market, would be short-lived.
They added that prices would find support from tight global supplies and fierce demand for crude oil from the likes of China and the United States -- the biggest global energy consumers.
Meanwhile, Iran said its policy stance in OPEC would not change, after President Mahmoud Ahmadinejad issued a decree Sunday which, in a surprise move, replaced oil minister Kazem Vaziri Hamaneh with the head of the national oil company, Gholam Hossein Nozari.
In one of his final statements as oil minister of OPEC's number two producer and the world's fourth biggest, Vaziri Hamaneh said last month that Iran firmly opposed a hike in OPEC's crude oil output to keep oil prices down.
In Paris, the International Energy Agency (IEA) last week called on OPEC nations to increase production to cope with an expected surge in winter demand in the northern hemisphere.
OPEC countries are to meet in Vienna in September to make a decision about whether to change their output quota, but members have insisted that the oil market is well supplied.
AFP 14 1100 GMT 08 07
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