Producers' group Opec has slashed its demand forecasts for the year, warning that oil demand is shrinking faster than previously thought.
Producers' group Opec has slashed its demand forecasts for the year, warning that oil demand is shrinking faster than previously thought as the slowing global economy erodes consumption and keeps oil prices under pressure. In its monthly Oil Market Report, released yesterday, Opec said demand would drop by 1.37 million barrels per day this year to average 84.2 million bpd. Its previous forecast was for consumption to fall by 1.01 million bpd.
"In the coming months, the market is expected to remain under pressure from uncertainties in the economic outlook, demand deterioration and the substantial overhang in supply," Opec said in its Monthly Oil Market Report.
Opec joins the International Energy Agency (IEA) and the US government in lowering global oil demand forecasts since last week. Its reduction is less severe than the IEA's.
Last week the IEA, adviser to 28 industrialised countries, said world oil demand will slide by 2.4 million bpd in 2009, more than 1 million bpd down from its previous forecast.
In its report, Opec said demand is falling fastest in the developed nations of the Organisation for Economic Co-operation & Development (OECD). The global downturn has also curbed previously rapid growth in countries like China and India.
Demand growth in countries outside the OECD has fallen by 90% year-on year, it said.
Meanwhile, the group which has cut output quotas in a bid to support oil prices, said its production was at 27.9 million bpd in March, down 145,000 bpd from February.
Opec held its output quotas steady when it last met in March, but called another meeting for 28 May to reassess the market.
"Vigilant monitoring is essential to assess the likely developments in the second half of the year and the impact these will have on market stability," Opec said in its report.