With the outlook for economic growth in the US revised downward, the Organization of Petroleum Exporting Countries has cut its forecast for worldwide oil demand growth this year by 150,000 b/d.
In its latest Monthly Oil Market Report, OPEC forecasts global oil demand will increase by 1.21 million b/d this year to average 88.14 million b/d.
OPEC noted that economic worries along with high oil prices have affected oil demand in the advanced economies of the Organization for Economic Cooperation and Development (OECD), leading to weaker-than-expected consumption during the summer driving season. And oil demand in the OECD is expected to continue to contract after a temporary rebound last year.
In 2012, OPEC forecasts that world oil demand will rise by 1.3 million b/d, representing a slight downward revision from last month’s report.
World economic growth has been revised down to 3.7% in 2011 and to 4% in 2012. This was mainly due to revisions in the US forecast, which was cut to 1.8% from 2.5% in 2011 and to 2.3% from 2.9% in 2012.
Developing Asian countries continue to be the main drivers of growth, the report said. Forecasts for economic growth in China are unchanged at 9% for 2011 and 8.5% for 2012. India’s forecast for 2011 growth was trimmed to 7.9% from 8.1% but was unchanged at 7.7% for 2012.
US commercial inventories climbed by 22.1 million bbl in July driven by products, which increased by 25.7 million bbl, as US crude stocks fell by 3.6 million bbl. With this build, US commercial oil inventories stood at 19.5 million bbl above the historical average.
By the end of July, crude in the US Strategic Petroleum Reserve declined by 6.8 million bbl to 719.8 million bbl due to the International Energy Agency-coordinated release of strategic reserves. In Japan, data for June showed that commercial oil inventories dropped by 4.5 million bbl, with crude and products showing a decline of 3.4 million bbl and 1.1 million bbl respectively. This put Japanese oil inventories 4.6 million bbl below the historical trend, OPEC said.
This month’s reports shows that non-OPEC supply will increase by 580,000 b/d this year, following a downward revision, mainly due to lower-than-expected supply from Canada, Norway, UK, Malaysia, Vietnam, and Brazil, plus historical adjustments.
In 2012, non-OPEC oil supply is forecast to grow by 730,000 b/d to average 53.57 million b/d, unchanged from the previous report, due to projected increases in Brazil, Canada, Colombia, and the US.
OPEC natural gas liquids and unconventional oils are forecast to increase by 390,000 b/d in 2011 and 2012, also unchanged from the previous report.
Demand for OPEC crude in 2011 is estimated at 30 million b/d, unchanged from the previous assessment and up about 200,000 b/d from 2010. In 2012, demand for OPEC crude is forecast to average 30.2 million b/d, revised down by 100,000 b/d from the previous report.