OilVoice - OPEC Slashes 2009 Global Demand Forecast by Further 400,000 Bpd

OPEC Slashes 2009 Global Demand Forecast by Further 400,000 Bpd

Monday, February 16, 2009

Global oil demand is set to decline by 580,000 barrels per day in 2009, predicted the Organisation of Petroleum Exporting Countries (OPEC), on Friday. This will see demand fall to 85.13 million bpd, thanks to the increasingly bearish economic climate.

It is February Oil Market Report OPEC, reported: “World oil demand continues its steep decline from last year and is expected to follow this strong negative pattern at least for the first three quarters of the year.”

The Vienna-based group previously forecast that oil demand would only contract by 180,000 bpd (barrels per day). However, this remains significantly higher than the International Energy Agency’s (IEA) outlook, who this week foresaw demand plummeting by as much as 980,000 bpd.

The report also points to the USA as the main contributing factor behind the near-paralysing fall in demand for oil. Last year, North America alone dropped its own demand for oil by 1.2 million bpd, compared with 1.6 million bpd for the entire OECD region. “This was more than enough to offset all the oil demand growth from other regions of the world,” the report read.

OPEC periodically cutting its global demand forecast is becoming almost as inevitable as death and taxes, and paves the way for yet another round of supply cuts from the oil-producing cartel.

The 12-twelve strong group is scheduled to meet on March 15, in Vienna, and will most likely cut output levels further in an attempt to stimulate prices and protect revenues from oil sales. Key – and often vocal – member nations including Iran, Venezuela and Libya have already advocated such cuts.

Perilously low demand is only serving to push inventories higher – which will undoubtedly weigh on prices later in the year. “The high and growing stock levels are likely to disrupt the overall stability of the market,” said OPEC’s economists. In the US alone stocks of crude have risen for seven consecutive weeks.

OPEC, who collectively pumps more a third of the world’s oil, has repeatedly failed in its previous attempts to prop up prices by cutting back on oil output. However, the cartel seems determined to carry on with its policy in the blind hope that simple supply and demand will prevail. Thus far the group has a cumulative cutting total of 4.2 million bpd since the price of oil first began to decline at the end of last summer.