OPEC expects demand for oil to rise despite continuation of high prices
cartel predicts chinese sales will offset European slump
Agence France Press
VIENNA: OPEC's estimate for demand for its oil in 2006 is up by 100,000 barrels per day (bpd), even if high prices are reducing growth in oil demand in certain key regions, especially Europe, the powerful cartel said in a report Monday. "The estimated demand for OPEC crude in 2006 is expected to average 28.7 million bpd, representing an upward revision of 0.1 million bpd versus last month," the 11-nation Organization of Petroleum Exporting Countries said in its monthly report for June.
OPEC said "world oil demand in 2006 is forecast to grow 1.4 million bpd or 1.6 percent to average 84.6 million bpd, broadly unchanged from last month's estimate."
But it said that "even though the largest share of the increase in world oil demand growth is mainly in the developing countries, signs indicate an easing in oil demand, partly due to high oil prices."
The report said: "In terms of oil demand, with the exception of OPEC member countries and China, the dampening effect of higher oil prices has been moderately influencing world oil demand growth more than the healthy economy which is supposed to strengthen inventory demand."
It said that despite the start of the summer driving season in the United States, "US oil demand has not picked up as it should be due mainly to high gasoline prices."
But "US oil demand is expected to halt its decline with the relief of stronger gasoline and middle distillate demand and show an increase in the second quarter of 2006," OPEC said.
In the United States "oil demand in the second quarter is keeping up with the high 3.4 percent economic growth" and in the Middle East "oil demand has been revised up a slight 30,000 bpd to stand at 6.1 million bpd," OPEC said.
It said that in Europe "even though economic indicators are strengthening and the weather was colder in the first quarter of the year, oil demand figures are not picking up in the second quarter to reflect the economic growth and that can be attributed to a certain degree to the high oil prices."
But China "is showing strong economic growth which has translated into medium-strong demand for energy," OPEC said.
In China, "all supporting energy drivers such as industrial production, inland cargoes, agriculture, construction and passenger transportation are showing healthy growth" and summer temperatures "could boost demand for electricity," OPEC said.
It said that "China's strong economic boom has increased oil demand in the first half, resulting in an upward revision of 20,000 bpd for the entire year.
"Chinese oil demand is now expected to grow by almost 0.5 million bpd to average 7 million bpd in 2006," OPEC said.
The International Energy Agency said in Paris earlier this month that world oil supplies rose by 445,000 barrels per day in May to 85 million barrels, with OPEC pumping half the increase, but demand remains steady even though high prices are weighing on consumption.
The IEA drew a broad picture in its monthly report of strongly growing demand for oil products in developing countries in contrast to flat or declining demand in advanced industrialized countries in the OECD.
World oil prices fell Monday on easing supply concerns as major crude producer Iran appeared ready to strike a diplomatic deal with the West over its nuclear program, analysts said.
New York's main contract, light sweet crude for delivery in July, had dropped $0.67 to $69.21 per barrel in electronic deals before the official opening of the US market.
In London, Brent North Sea crude for August delivery slid $0.93 to $68.07 per barrel in electronic trading.