OPEC says oil demand could weaken over next few months

By Margaret McQuaile

September 9 - OPEC said September 9 global demand for oil could weaken over the remainder of this year as government stimulus packages are wound down, noting that the slowing economic recovery was already hitting growth in oil consumption.

For now, though, the oil producer group expects world oil demand to continue growing at an annual rate of around 1 million b/d both this year and next.

On an annual basis, OPEC has slightly raised its previous forecasts of world oil demand by 10,000 b/d to 85.51 million b/d this year and 85.56 million b/d in 2011.

But it has trimmed its forecasts of demand for its own crude by 90,000 b/d in 2010 and by 80,000 b/d 2011 while increasing its projections of growth in non-OPEC oil supply.

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The oil producer group now sees demand for crude from its 12 members averaging 28.65 million b/d this year and at 28.84 million b/d in 2011. The 2010 projection represents a decline of 320,000 b/d from 2009.

OPEC has revised upward its month-ago forecasts of non-OPEC oil supply growth by 140,000 b/d in 2010 and 150,000 b/d in 2011. It now sees non-OPEC oil supply averaging 52.06 million b/d in 2010 and 52.42 million b/d in 2011.

Some 80,000 b/d of the 2010 non-OPEC revision is in OECD production, the result of adjustments in US and UK output forecasts. OPEC now sees total OECD production averaging 19.72 million b/d this year.

OPEC noted that the US oil demand growth had so far been stronger than expected.

However, it added, "this has been more than offset by the ongoing contraction in European consumption and, overall, the OECD region is not expected to achieve any oil demand growth in 2010. Similarly, oil demand growth in the emerging economies, especially China, has helped to partially compensate for the lower growth in OECD demand. However, efforts by the government in China to prevent the economy from overheating could dampen oil demand growth in the coming months."

OPEC said in its latest monthly oil market report that global oil demand in the first half of this year had turned out to be higher than expected, thanks to support from stimulus packages in key consuming countries.

But as these packages are wound down, OPEC expects demand to dip in the second half of 2010.

"Non-OECD countries will remain the key contributors to demand growth, led by China, India, the Middle East and Latin America," OPEC said.

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