–Now Expects 2012 Oil Demand To Grow By 0.9 Million Barrels Per Day
WASHINGTON (MNI) – The following is the first part of excerpts from
OPEC’s Monthly Oil Market Report for February released Thursday:
2012 World Oil Demand Growth Forecasts
Recent economic setbacks have pushed the future forecast of world
oil demand further down. Worries about the US economy, along with the EU
debt problem, are adding more uncertainty to world oil needs over the
next 12 months. As a result, the world oil demand forecast has been
revised down by 0.12 mb/d for 2012. Furthermore, retail petroleum prices
have led to a further reduction in transport fuel usage. A halt in
operations in Japanese nuclear plants is strengthening oil consumption,
and the country is expected to use crude and fuel oil to operate some of
its other power plants this year. Non-OECD regions, especially China,
India, the Middle East and Latin America, are expected to assume most of
the forecast growth in oil use worldwide this year.
In summary, waning OECD economies are affecting the oil market
negatively and imposing a large amount of uncertainty for the short
term.
Firming retail petroleum prices are expected to have a negative
impact on oil demand across the globe. The transportation and industrial
sectors are the ones most affected. The use of oil in both sectors is
slowing noticeably worldwide. World oil demand growth is forecast at 0.9
mb/d in 2012, and there is no change to the estimate for 2011.
—
Recent Narrowing of Light/Heavy Spreads
Light/heavy crude oil spreads tightened sharply over the past
several weeks in favour of heavy crudes. Brent has been trading just
$1.50/b above Dubai, less than half the premium three months ago, and
LLS only $5/b above heavy Mexican Maya compared with a $14/b premium in
early October. Many factors were influencing this unusual development of
heavy sour crudes trading at a very narrow spread to light sweet grades,
or even in some cases at a premium. Predominantly, this has been driven
by strong fuel oil price gains due to improving demand, as well as
increased supply of light sweet crude which has dampened prices for
these grades, along with concerns about a possible tightening in heavy
sour supplies.
…
The rapid growth in light sweet production, mainly associated with
the recovery in Libyan output, coupled with concerns about a possibly
tight sour market due to geopolitical factors, colder weather over the
remainder of winter and continued high demand for fuel oil, may put
further pressure on the light sweet/heavy sour spread. As result, the
spread between light sweet and heavy sour crude is likely to remain
narrow for at least some time.
—
World Economic Growth Outlook
World economic growth has been revised down slightly to 3.4% in
2012 and remains at 3.6% for 2011. The US continues recovering and is
expected to grow by 2.2% in 2012. Japan’s 2012 forecast has been revised
down to 1.8% from 1.9% previously, amid efforts to combat the
after-effects of last year’s triple disasters. The Euro-zone’s
deceleration has continued and 2012 growth expectations were revised to
minus 0.2% from plus 0.2% previously. Emerging markets seem to be
experiencing slower momentum compared to last year. As a result, the
forecasts for China were revised down from 8.5% to 8.2% and for India
from 7.4% to 7.2% for 2012. While global output activity has shown some
recovery in the past weeks, downside risks prevail and the Euro-zone
debt crisis, slowing growth in the developing economies, and the fragile
improvement in the US warrant close monitoring.
—
Demand For OPEC Crude
The demand for OPEC crude for 2012 is projected to average 30.0
mb/d, about 0.1 mb/d lower than in the previous report, driven mainly by
a downward revision to demand, outweighing a marginal lower revision in
non-OPEC supply. In quarterly terms, the first quarter saw the bulk of
the adjustment, being revised down by 0.3 mb/d, followed by 0.1 mb/d
downward revisions to the second and fourth quarters, while the third
remained unchanged from the previous assessment. The required OPEC crude
is forecast to show a decline of 0.1 mb/d from the previous year. The
first and third quarters are estimated to see negative growth of 0.1
mb/d, while the second is expected to see negative growth of 0.2 mb/d
and the fourth quarter is expected to remain unchanged.
—
OPEC Crude Oil Production
Total OPEC crude oil production averaged 30.90 mb/d in January, the
highest since October 2008, which indicates a marginal increase of 56
tb/d from the previous month, according to secondary sources. OPEC crude
oil production experienced an increase from Libya, Kuwait, and Iraq,
while crude output from Saudi Arabia, Iran, and the UAE experienced a
decline. OPEC crude oil production, not including Iraq, averaged 28.15
mb/d, up by 26 tb/d from December.
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** Market News International Washington Bureau: 202-371-2121 **
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