London: The Organisation of Petroleum Exporting Countries (Opec) yesterday trimmed its forecast for global growth in oil demand in 2008, the latest sign that record-high oil prices are putting the brakes on consumption.
World oil demand will rise by 1.16 million barrels per day (bpd) this year led by Asia, the Middle East and Latin America, 40,000 bpd less than the previous forecast, Opec said in its Monthly Oil Market for May.
The report by Opec’s economists underlines the group’s view that factors beyond oil supply and demand are driving oil prices to all-time highs. Crude oil hit a record high of $126.98 a barrel on Tuesday.
“Oil demand growth is expected to experience the typical seasonal low consumption in the second quarter,” the report said.
“This year’s summer driving season is not likely to show its normal annual growth due to the anticipated weaker gasoline demand in the US.”
Oil’s climb has brought more calls from industrialised countries, such as the US, for Opec to increase oil output. But Opec says factors like the weakness of the US dollar, speculative trading and political tension are lifting prices, not a lack of oil.
Yesterday’s report dusted off another factor Opec has frequently cited for oil’s rally, a lack of capacity at oil refineries and its impact on the crude oil market.
The rising premium of higher-quality crudes to lower-quality grades reflected a shortage of refineries able to make light products, such as gasoline, from lower-quality crude, Opec said.
Opec is the latest forecaster to trim its projection for world oil demand this year because of the slowing world economy and high prices.
But Opec’s adjustment is much smaller than that of the International Energy Agency, which earlier this week cut its demand growth forecast by 230,000 bpd and said it may lower the figure further.
Strong consumption in places such as China and the Middle East is expected to offset weak demand in members of the Organisation for Economic Co-operation and Development.
Opec again trimmed its estimate for supply from non-member countries in 2008, leading to a slight increase in the amount of oil its 13 members need to pump to balance the market.
It expects non-Opec supply to average 50.18 million bpd this year, about 100,000 bpd less than previously forecast in part due to lower output estimates from Russia, Mexico and Norway