World oil demand growth revised down on slower economy - OPEC

11 October 2011 11:50  [Source: ICIS news]

LONDON (ICIS)--World oil demand growth has been revised down by 180,000 bbl/day to 900,000 bbl/day in 2011, due to a slowdown in the global economy, OPEC said on Tuesday.

Economic uncertainty has negatively impacted world oil demand, particularly in the Organisation for Economic Cooperation and Development (OECD) region.

“The decelerating US economy, high unemployment rate and feelings of uncertainty among consumers, has damped US oil demand. Similarly, debt problems in the eurozone are causing EU economies to lose some of their estimated growth this year,” OPEC said in its October monthly oil market report.

It added that a delay in Japan’s rebuilding efforts following the devastating tsunami in March is contributing to the lower-than-expected oil demand.

Chinese oil demand is also surrounded by uncertainty because of new government policies aimed at reducing transport fuel use, while India’s increase in retail prices is expected to play a major role in dampening oil consumption in the coming year.

OPEC said that due to the weakening economic outlook, the forecast for world oil demand growth in 2012 has been revised down to stand at 1.19m bbl/day year on year, down from the previous growth estimate of 1.27m bbl/day, to average 89.0m bbl/day.

The report also said that non-OPEC oil supply is forecast to increase by 360,000 bbl/day to average 52.6m bbl/day in 2011, following a downward revision of 160,000 bbl/day from the previous month.

“North America is now expected to have the highest growth among all non-OPEC regions in 2011, followed by Latin America and the FSU [Former Soviet Union], while OECD Western Europe is projected to be the region with the biggest decline,” OPEC said.

In 2012, non-OPEC oil supply is expected to grow by 830,000 bbl/day to average 53.5m bbl/day, supported by anticipated growth in Brazil, Canada, Colombia, and the US, OPEC added.

Looking at refinery operations in Europe, OPEC's report said that product market sentiment turned bearish as product cracks decreased due to weaker demand on the deteriorating economic situation in the eurozone.

“European light distillate cracks suffered a sharp drop due to poor gasoline demand and weak naphtha buying interest from petrochemical producers,” OPEC said.

“In the case of naphtha, in addition to the impact of economic concerns, the petrochemical sector has lately preferred propane as feedstock as it has been moved to a wider counter-seasonal discount, making naphtha less attractive for ethylene cracking units,” it added.

OPEC said that bearish sentiment was fuelled by the reduction in gasoline demand from Africa and the Middle East and the relatively lower naphtha requirements from the traditional markets in Asia.


By: Franco Capaldo
+44 (0)20 8652 3214



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