World oil demand is likely to grow more slowly in 2012 because of a fragile global economy and deepening decline in consumption in Europe, Opec said in its first forecast for next year.
Oil prices could draw some support from a lingering supply shortfall of more than 1 million barrels per day between the anticipated demand for Opec crude and the amount pumped by the 12-member group, although increased output from top producer Saudi Arabia has narrowed the gap.
In its monthly report out today, Opec predicted world oil consumption would rise by 1.32 million bpd next year, slightly lower than the growth of 1.36 million bpd expected this year.
Opec said the demand outlook was subject to much uncertainty and could contract further depending on factors such as the speed of Japan’s recovery from this year’s nuclear disaster and tsunami, as well as on the impact of oil prices on developed economies.
“Should higher international oil prices persist, or should further setbacks in the OECD economies occur, then it might impose a stronger reverse elasticity on oil demand, putting more weight on the downside risk,” Reuters quoted Opec as saying in the report.
“This risk might be translated into a reduction of current growth by 200,000 bpd.”
Opec was the first of the three most closely watched oil forecasters to update its supply and demand estimates this month. Its 2012 demand growth forecast is lower than that of the US government’s Energy Information Administration, which predicts a rise of 1.6 million bpd.
The EIA is scheduled to release its July report later today while the International Energy Agency, adviser to the US and 27 other industrialised countries, will do so on Wednesday.
Analysts are especially focused on the IEA’s predictions.
“With prices at this level we can expect a strong impact on demand,” Christophe Barret, global oil analyst at Credit Agricole, told Reuters. “What I am waiting for is the IEA report tomorrow, that will be very important.”