OPEC Cuts Forecast for Oil Demand as Economy Shrinks

The Organization of Petroleum Exporting Countries cut its 2009 forecast for the ninth straight month, predicting oil demand will fall as consumption shrinks in the U.S., the world’s biggest energy consumer.

OPEC lowered its estimate for global demand this year by 150,000 barrels a day to 84.03 million. Demand will contract by 1.57 million barrels a day this year, or 1.8 percent, the Vienna-based producer group said today.
“Continuous downward revisions to world economy growth have been exhausting world oil demand,” the group’s secretariat said in its monthly report today. “The current global recession may go down in history as the deepest and most synchronized downturn the world has experienced in the past 60 years.”

While there may be a “slow recovery” in the global economy in the fourth quarter, U.S. demand continues to shrink, OPEC said. The nation’s consumption dropped by 1.5 million barrels a day in April compared with the same month a year earlier, it said. North American demand will shrink 3.2 percent in 2009 to 23.5 million barrels a day.

Oil prices have climbed 34 percent this year, trading above $60 yesterday for the first time in six months on optimism about an economic recovery and record production cuts by OPEC. Still, U.S. crude stockpiles remain at the highest since 1990 as the recession saps demand for fuel.

“Weak industrial production, high unemployment rates and a slowdown in travel are the main factors behind the collapse in oil demand,” according to the OPEC report. World consumption shrank by a record 2.4 million barrels a day in the first quarter of 2009 compared with the same period last year.

Bloomberg