Organisation leaves 2013 global demand growth unchanged at 840,000bpd; Trims economic growth forecasts for US, Eurozone; Sees US oil supply reaching 28-year high this year
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orld oil demand growth could fall short of forecasts in 2013 due to economic weakness and US supply will hit its highest in three decades, Opec said yesterday, curbing the need for oil from the 12-member producer group.
The Organisation of the Petroleum Exporting Countries in a monthly report left its forecast for growth in global oil consumption unchanged for now, still expecting an expansion of 840,000bpd this year.
“However, there are a number of downward risks to this growth,” the report from Opec’s Vienna headquarters said. “The euro’s instability could lead to even deeper recession in some Mediterranean countries.
“And the potential impact of a full budget cut in the US could drag down the world economy, consequently reducing oil demand.”
Opec, the source of more than a third of the world’s oil, expects the US economy to expand by 1.7% in 2013, down from the 1.8% previously thought. Growth in the eurozone is now seen contracting by 0.2%, having earlier been expected to expand slightly.
“While the US economy continues recovering, it is mainly the sustained uncertainty about the budgetary negotiations in Congress that are holding back the momentum to continue at its full potential,” Opec said.
“The eurozone seems to continue to be significantly entangled in its sovereign debt crisis.”
Opec in the report also trimmed forecast demand for its own crude in 2013 by 70,000bpd due to rising supply from outside the 12-member group.
The non-Opec supply growth will again be driven by the US, which is enjoying a shale energy boom. Opec expects US oil supply to rise by 580,000bpd to 10.59mn bpd in 2013, which it said would be the highest since 1985.
Opec’s own production rose by 74,000bpd in February to 30.31mn bpd, according to secondary sources cited by the report, led by higher output in Iraq and Saudi Arabia.
The report from Opec is the first of this month’s trio of major oil outlooks to emerge. The US government’s Energy Information Administration was scheduled to publish its estimates later last night.
The International Energy Agency, adviser to 28 industrialised countries, issues its report today.
Yesterday, oil climbed towards $111 a barrel, reversing losses earlier in the day as a slightly weaker dollar lured investors.
Crude was pressured in earlier trade by the prospect of slower demand growth in China and the US, the world’s biggest oil consumers.
The gloomy Opec outlook on demand helped weigh on prices.
Brent crude was up 50¢ at $110.72, after slipping to $109.55 earlier. US oil was up $1.05 at $93.11.
“Cold weather and a slightly weaker dollar sparked off some technical buying by the funds who had been liquidating their positions,” Christopher Bellew of Jefferies Bache in London said.
A weaker greenback can boost dollar-denominated commodities such as oil. Oil also has enjoyed some support from a strong US equity market this week.
Despite the gains, market watchers expected oil to trade in a tight range.
“We still see range-bound macro-driven trading for Brent this week, with the market holding near early March lows,” said Andrey Kryuchenkov, an analyst at VTB Capital.
Stockpiles of crude in top oil burner, the US, are forecast to have risen for an eighth straight week.
A preliminary Reuters poll of six analysts showed US crude inventories rising 2.4mn barrels in the week to March 8. All six analysts forecast a build in crude stocks.