OPEC predicts fall in demand for oil

OPEC forecasts demand for its crude oil will fall by 216,000 barrels a day next year and said the rising cost of credit may slow global economic growth.

The Organisation of Petroleum Exporting Countries, whose members produce more than 40 per cent of the world’s oil, next year will need to supply an average 30.8 million barrels of output a day, the group said in its monthly report. The “call” on OPEC crude will average 31 million barrels in the fourth quarter of this year, 100,000 barrels a day more than in 2006.
“Financial instability could negatively affect the real economy in the US and globally, with a subsequent impact on oil demand,” the report said. “However, it is still too early to gauge the full impact of recent developments.”

Oil prices breached $US80 a barrel in New York for the first time last Wednesday, a day after OPEC decided to increase its output by 500,000 barrels a day. Speculation that global stockpiles may be drained before the end of the northern hemisphere’s winter has so far trumped concern the impact of financial market volatility will cut demand.

“The additional 500,000 barrels isn’t going to make much of a dent,” said Simon Wardell, energy research manager at Global Insight Inc in London. “We think any fallout from the financial turmoil will be next year. That points to an increase in demand in the fourth quarter and we just simply don’t have enough supply to go around.”

Sydney Morning Herald