Demand for OPEC Oil May Drop in 2010 on Weak Economy.
Demand for OPEC crude may drop by 100,000 barrels a day this year as stockpiles are higher than the five-year average and the global economy is weak, the United Arab Emirates oil minister said. Demand for crude produced by the Organization of Petroleum Exporting Countries could drop this year after last year falling by 2.3 million barrels a day to 28.7 million barrels a day, Mohamed Al-Hamli said in a speech in Abu Dhabi today.
?Oil price stability has been achieved despite weakness in the global economy and unfavorable market fundamentals,? he said. Prices are fluctuating between $70 and $80 a barrel, ?a level that is acceptable to producers, which at the same time does not dampen prospects for economic recovery.?
OPEC meets March 17 in Vienna to decide whether to adjust production quotas for the first time since it agreed a record output cut in December 2008 as fuel demand tumbled during the worst global recession since World War II.
Oil traded below $79 a barrel today as analysts forecast U.S. crude supplies probably increased for a fifth week, signaling demand from the world"s biggest energy consumer may be slowing. Oil was at $78.66 a barrel at 8:19 a.m. London time.
World demand fell by 1.4 million barrels a day last year, the minister said. This year, it is forecast to grow by 800,000 barrels a day. Stocks in developed nations are around 93 million barrels above the five-year average, or almost 60 days of forward cover, he said.
?The market is well-supplied,? the minister said, declining to comment on what OPEC will decide at its meeting. ?There is plenty of oil in the market.?
The oil market is oversupplied because of the recession, U.S. Energy Secretary Steven Chu said last week. Crude production from all 12 OPEC members, including Iraq, which is not subject to quotas, rose to a 14-month high of 29.17 million barrels a day in February, according to Bloomberg estimates published last week.
Demand for OPEC oil this year will remain almost at the same level as last year, the group said in a report last month. OPEC is unlikely to change production targets, Algerian Oil Minister Chakib Khelil said Feb. 22.
The U.A.E."s daily oil output capacity is 2.8 million barrels and it is targeting 3.5 million barrels, the minister said, without specifying a timetable for the increase.