OPEC says deep recession slashes need for its oil

LONDON (Reuters) – The first drop in world oil demand in 25 years will sharply lower the need for OPEC crude in 2009, the producer group said on Tuesday, opening the door for a substantial production cut when it meets in Algeria this week.

In its monthly oil market report, OPEC said demand for its crude is expected to fall by an average of 1.4 million barrels per day (bpd) next year, with the first half of 2009 seeing an even steeper decline.

Global oil demand is now expected to decline by 100,000 bpd in 2008 before falling by a further 150,000 bpd in 2009 to average 85.7 million bpd, due to a marked slowdown in the world economy.

That represents a 640,000 bpd downward revision to OPEC’s 2009 estimate last month, which forecast global oil demand would grow by 490,000 bpd.

The producer group also forecast non-OPEC supply would now grow by just 640,000 bpd in 2009 — compared to 710,000 bpd in last month’s report — while its estimate of non-OPEC supply growth in 2008 has been revised down to 100,000 bpd from 200,000 bpd the previous month.

Reuters