A Review of the Nigerian Energy Industry

OPEC slashes global oil demand forecast

OPEC11 June 2013, Vienna – The Organisation of the Petroleum Exporting Countries, OPEC, has trimmed 10,000 barrels per day off its world oil demand growth forecast, now predicting growth of 780,000 barrels per day for 2013.

Any slowdown in the economic recovery may upset an expected balance in the oil market for the second half of this year, OPEC said, Tuesday, in a report, downgrading its global oil-demand growth views.

In its monthly oil-market report for June, OPEC, which accounts for more than a third of world’s daily oil consumption, said “uncertainties on both the demand and supply side have the potential to undermine the expected market balance in the second half of 2013.”

Amid lingering economic uncertainty, OPEC marginally cut its global oil-demand growth forecast for 2013 by 10,000 barrels a day from last month’s report. But demand for the commodity will still grow by about 780,000 barrels a day this year, it said.

OPEC warned that “risks are skewed towards the downside” for demand. “This is due largely to the weak economic outlook for Europe, as well as to any possible setbacks in the US economic recovery,” it added.

OPEC also stated that the use of fuel oil in Japan has recently weakened mainly due to it being replaced with natural gas and coal. It added that the threat from a slowdown in economic growth also existed in developing countries, which have been consuming more barrels of oil in recent years.

But, the organisation also said there was a risk markets wouldn’t get as much as oil as expected if US production is heavily hit by hurricanes. Due to a boost in non-conventional production, the US will pump nearly two-thirds of the additional 1 million barrels a day coming from non-OPEC producers this year, according to the organisation.

But the “risks remain on the high side for the US supply forecast,” OPEC said. “The official forecast expects an ‘active or extremely active’ hurricane season this year, which could impact production in the coming period,” it said.

While the US remains vulnerable to oil disruptions in its offshore, it’s expected to increasingly rely on resources trapped in the rock onshore. A report released by the US government Monday showed 10% of the world’s recoverable crude-oil resources may be held in shale formations in the US and elsewhere.

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