London, 12 May 2010 – Reuters
OPEC raised its estimate for world oil demand growth in 2010 for a third successive month on Tuesday, but its figures showed economic recovery would not be sufficient to wipe out a surplus of supply this year.
The monthly report from the Organization of the Petroleum Exporting Countries, which pumps more than one in every three barrels of oil, said demand would rise by 950,000 barrels per day (bpd) in 2010, 50,000 bpd higher than previously forecast.
“Overall, the recent signs of improvement in the global economy have been encouraging,” OPEC said in the report.
“However, in light of current uncertainties, the forecast for global [economic] growth in 2010 has been left unchanged at 3.5 percent.”
The International Monetary Fund in April increased its forecast for global growth to 4.2 percent in 2010.
OPEC is the first of three major forecasters to release its monthly report and it has the lowest forecast for demand growth. The US Energy Information Administration (EIA) is scheduled to issue its report later on Tuesday and the International Energy Agency (IEA) follows on Wednesday.
The report from OPEC raised its forecast for demand for its crude by 40,000 bpd from last month to 28.85 million in 2010, but this is still 100,000 bpd lower than last year.
OPEC also said that members’ production continued to rise in April, reducing compliance with their individual output targets.
Members with output quotas, all except Iraq, met only 51 percent of the targeted 4.2 million bpd cuts in April, down from 52 percent in March, according to Reuters calculations based on the latest OPEC data.
Total OPEC production including Iraq was 29.25 million bpd in April, the report said, indicating a market surplus of more than 400,000 bpd this year if the group’s estimates prove correct.
OPEC also raised its forecast for production growth from other countries this year, with non-OPEC supply now seen at 530,000 bpd, up by 30,000 bpd from last month’s report.
Despite evidence of a market in surplus, oil prices averaged their highest level since September 2008 last month, not once dipping below the $80 a barrel mark.
OPEC said the average price of its reference basket of crudes has average $77.20 a barrel so far in 2010, an increase of 64 percent over the same period last year.
While prices have generally been above the $75 a barrel level seen as necessary by the group to encourage investment, the group fears higher prices could significantly curb the demand it relies on for future revenues.
“The transportation sector, which accounts for almost half of the oil used worldwide, is heading toward turbulence,” OPEC said, adding government stimulus programs are artificially supporting the sector.