Oil prices fall on vulnerable world economy, rising production - OPEC

10 May 2013 11:38  [Source: ICIS news]

LONDON (ICIS)--A vulnerable global economy, weak growth prospects, rising crude oil production combined with high stock levels sent crude oil prices plummeting in April, according to oil cartel OPEC.

In its May monthly oil report, OPEC said demand for its crude in 2013 is expected to average 29.80m bbl/day, up by 100,000 bbl/day compared to a month earlier. However, this represents a decline of 400,000 bbl/day compared to 2012.

OPEC attributed falling oil demand on the weak global economy. Economic growth in China was revised downwards to 8.00% in April, from 8.10% in March as export orders declined.

However, the cartel raised its economic growth forecast for Japan from 0.80% to 1.10% after the Japanese government announced a large monetary stimulus package. US and eurozone growth forecasts were held steady in April where the US economy is forecast to grow at 1.80% and the eurozone a contraction of 0.50%.

Despite expectations for falling demand for OPEC crude compared to 2012, world oil demand in 2013 was forecast to grow by 800,000 bbl/day, where the extra demand is mostly met by rising non-OPEC crude oil production. Non-OPEC production is forecast to grow by 1.0m bbl/day in 2013, unchanged from the previous report.

The majority of the extra production is expected to emerge from the Americas, while European oil production will suffer the largest declines.

The OPEC reference basket, which comprises of a select number of crudes from OPEC, nations weakened for a second consecutive month in April, declining by more than 5%, compared to the previous month.

ICE Brent prices also saw a decline by more than 5% in April, however WTI prices was largely unscathed, weakening by around 1%.

By: Kawai Wong
+44 20 8652 3214

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