Wednesday, May 12, 2010

OPEC Increases 2010 Oil Demand Forecast on Outlook for China

May 11 (Bloomberg) -- The Organization of Petroleum Exporting Countries raised estimates for global oil demand in 2010 on optimistic outlook for economic growth in China.

OPEC, responsible for about 40 percent of the world’s oil, boosted its forecast for worldwide crude consumption this year by 180,000 barrels a day, or 0.2 percent, to 85.38 million barrels per day. It also raised projections for supplies from outside the organization.

“The recovery in the world economy appears to be continuing at a steady pace,” the Vienna-based secretariat said in a monthly report today. “China has been among the main drivers behind oil demand growth so far this year, which should continue for the rest of the year.”

OPEC, which announced a record series of supply cuts in late 2008 as demand crumpled, is unlikely to alter output quotas this year, Algerian energy ministry Chakib Khelil said in Doha May 9. A 30 percent rebound in oil prices during the past year has encouraged members to produce in excess of the allocations they agreed on December 2008. Crude futures traded around $75 a barrel in New York today.

Compliance among the 11 OPEC states bound by quotas slipped to 51 percent in April, from 52 percent the previous month, as members led by Venezuela, Nigeria and Saudi Arabia raised output. The 11 nations, excluding Iraq, pumped 29.25 million barrels a day last month, according to the report.

Producers outside the organization will provide 51.67 million barrels a day this year, about 140,000 barrels per day more than OPEC forecast in last month’s report. That equates to growth of 53,000 barrels a day, or 1 percent from 2009.

The world’s demand for OPEC crude will be 28.8 million barrels a day in 2010, about 40,000 barrels per day more than the organization forecast last month. Still, this “call-on- OPEC” will be 100,000 barrels a day lower this year than in 2009, according to the report.

Global oil demand growth this year will amount to 950,000 barrels a day, or 1.1 percent, according to OPEC. It raised its forecast for Chinese consumption by 50,000 barrels a day to 450,000 barrels a day.

The International Energy Agency, due to update its outlook tomorrow, estimated in its April 13 report that global demand will expand by 1.7 million barrels a day, or 2 percent, to 86.6 million barrels per day in 2010.

“The global economy is improving, but the challenges of sovereign debt in the developed countries, the ability of China to avoid overheating and persistently high unemployment levels need careful monitoring,” OPEC said.

OPEC’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. The organization’s next meeting is scheduled for Oct. 14 in Vienna.