OPEC has lifted its 2010 forecast for global oil demand, just a week before it’s due to meet for the final time this year to discuss production and pricing.
The group said in its December Monthly Oil Market Report this week that world oil demand is now expected to increase by 800,000 barrels a day to 85.13 million barrels a day, with the higher demand coming largely from developing countries and not major consuming countries in the developed world.
That’s a 70,000 barrel per day upward revision from its November forecast, but still less than the latest forecast from the International Energy Agency last Friday.
The IEA revised up by 130,000 barrels a day its forecast for 2010 global oil demand, which is now expected to average 86.3 million barrels a day.
That was an increase of 1.7%, or 1.5 million barrels a day, compared to 2009.
“Growth continues to be driven by non-OECD countries, notably in Asia and the Middle East,” the IEA said in its monthly oil report released Friday.
“Nonetheless, OECD prospects have improved to some extent, particularly in the Pacific.”
But going the other way was the US Energy Information Administration, which cut its forecast for global oil demand next year, and said that the weaker recovery by leading consumers such as the US was the major reason for the reduction.
The US government agency said global oil demand next year would be around 85.22 million bpd, 1.11 million bpd lower than the estimate by the IEA, but just above the OPEC forecast of 85.13 million bpd.
In its report OPEC noted that oil inventories remain exceedingly high in developed nations and ample stocks of refined petroleum products could continue to affect demand and, as a result, oil prices.
Stocks of middle distillates such as diesel remain high, while US petrol stocks are now at their highest since mid year, despite the recovery and higher car sales
OPEC said the year 2009 was one of the worst years for world oil demand.
"Consumption has recovered in the fourth quarter as a result of an improvement in economic activities worldwide; however, the forecast for global oil demand still shows a contraction of 1.4 mb/d in 2009, unchanged from the previous report.
"Following two years of sharp declines, world oil demand is expected to return to growth in 2010, with an increase of 0.8 mb/d following an upward revision of around 70 tb/d (thousand barrels a day) from the last assessment. Non-OECD countries will account for all of the increase.
"Downward risk factors that may put pressure on next year’s oil demand include the pace of the economic recovery in the OECD, especially in the US.
"Non-OPEC oil supply is forecast to grow by 0.5 mb/d in 2009 following an upward revision of 0.1 mb/d from last month’s assessment.
"The main contributors to the revision are the USA, Canada, Russia, Azerbaijan and Kazakhstan.
"In 2010, non-OPEC oil supply is expected to increase by 0.3 mb/d over the current year, the bulk of which comes from Brazil, Azerbaijan, Kazakhstan, Colombia, and the USA.
"OPEC NGLs and non-conventional oils are expected to add 0.5 mb/d in 2010 following an increase of 0.4 mb/d in 2009.
"In November, OPEC crude production averaged 29.1 mb/d, according to secondary sources, an increase of 47 tb/d over the previous month.
"A more detailed look at the supply/demand balance indicates that fundamentals will continue to be weak in the first half of the year before improving in the second half, as reflected in the demand for OPEC crude," OPEC said.
"Despite the low base in world oil demand in 2009, which suggests a strong increase in 2010 oil demand growth, the possibility of a weak and slow economic recovery could adversely affect oil demand growth," it warned.
Oil prices regained the $US70 a barrel level on Tuesday, but is still down more than 12% from its most recent peak of just over $US83 a barrel. It hit $US72 a barrel overnight on lower US stocks.
It has lost 5% or thereabouts in the past week or so.
The weakness has been on top of the turning upwards of the US dollar in the last two and a bit weeks.
OPEC ministers meet in Luanda, Angola, on December 22. No change in production quotas is likely.
