OPEC Expects Demand for Its Crude in 2013 to Be Below Last Year

July 8 (Bloomberg) -- OPEC says the world will need less crude oil from the group in 2013 than it did last year as the lingering impact of recession crimps demand and rising biofuels supply makes up for shrinking production elsewhere.

The Organization of Petroleum Exporting Countries, whose members supply about 40 percent of the world’s oil, slashed its forecast for global oil consumption in 2013 by 5.7 million barrels to 87.9 million barrels a day. OPEC will have to produce 31 million barrels of crude daily in 2013 to satisfy demand, compared with 31.2 million barrels last year, it predicted in an annual report today.

“There is a growing perception that the economic slowdown will be U-shaped, that is the recovery will gather momentum only gradually,” the group’s Vienna-based secretariat said in its World Oil Outlook published today. OPEC sees demand for its crude “rising slowly over the medium term, returning back to 2008 levels by around 2013.”

Oil’s slump from record high prices in July last year led OPEC to agree production cuts of 4.2 million barrels a day as the worst global recession since the Second World War reduced oil demand. The group has pledged to maintain its cuts, even as prices recovered above $60 a barrel on optimism that the worst of the recession is over.

OPEC estimates the world’s need for its crude or so-called “call on OPEC crude” by comparing total global oil demand with supplies of crude, natural gas liquids and non-conventional fuels from outside the group, such as biofuels and Canada’s oil sands, in addition to OPEC’s own natural gas liquids and non- conventional fuel supplies.

Demand Slump

The slump in demand has also led the group to lower its estimate for the amount of investment in new production projects required through 2013 by 30 percent to about $115 billion on new capacity. That compares with last year’s prediction of $165 billion.

More than 35 projects planned in the next four years, or a total of 5 million barrels a day of additional crude and NGL production, are likely to be shelved until after 2013, it said.

“The surge in investment plans in OPEC member countries that were aimed at addressing perceived market tightness, particularly in 2007 and the first half of 2008, would in actuality have turned out, at least partially, to be unneeded capacity,” OPEC’s report said.

Still, the group sees spare production capacity in member countries rising to “comfortable” levels of more than 6 million barrels a day in 2013.

Last Year’s Report

Global oil demand will rise 0.5 percent next year to 84.6 million barrels a day, up from 84.2 million barrels a day in 2009, according to the group’s estimates. OPEC’s forecast for 2009 oil consumption is 4 million barrels a day lower than it predicted in last year’s report. Thereafter, demand is expected to rise about 1 million barrels a day yearly through 2013 when it will be 4.4 percent higher than this year.

OPEC estimates that consumption in the developed countries in the Organization of Economic Development and Cooperation will drop 1 percent in 2010 to 45.5 million barrels a day and remain at that level through 2013.

The group also cut its prediction for oil production in non-OPEC member states. Output is forecast to rise 2 percent, or 1 million barrels a day, to 51.4 million barrels a day in 2013, according to the outlook. That is more than 4 million barrels a day lower than OPEC forecast last year.

As non-OPEC crude oil production is expected to decline through 2013, rising output of non-conventional fuel will drive most of the increase in non-OPEC supply.

Biofuels Rising

Non-conventional fuel supplies are expected to rise by 1 million barrels a day from 2009 to 2013, mainly attributable to rising biofuels production in the U.S., Brazil and China, according to OPEC. NGLs production will increase 0.4 million barrels a day, the group estimates.

Additionally, OPEC predicts that its own production of natural gas liquids and gas-to-liquids fuel will rise 1 million barrels a day to 5.7 million barrels a day in 2013, further reducing the call on OPEC crude.

OPEC also cut its forecast for oil demand in 2030 to 105.9 million barrels a day from its estimate last year of 113.3 million barrels a day because of increased efficiency and lower than forecast economic growth.

Developing countries are likely to account for most of the rise, with almost 80 percent of the net growth through to 2030 in developing Asia, OPEC said.

OPEC’s medium-term “reference scenario” estimates are based on the world economy shrinking by 1.3 percent this year and rising thereafter to 3.5 percent growth in 2013.

Indonesia left the producer group this year. OPEC’s 12 remaining members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.