LONDON (Reuters) - OPEC on Tuesday cut its forecast for global oil demand growth in 2008 for a fourth time this year and said consumption would slow in 2009, signaling a more comfortable supply and demand balance.
The Organization of the Petroleum Exporting Countries also said the need for its oil in 2009 would show the first significant decline since 2002 due to slower demand and rising supply from non-member countries.
“Market fundamentals have clearly been softening,” OPEC said in its Monthly Oil Market for July. “This trend in fundamentals is expected to continue -- and even gather pace -- into the coming year.”
OPEC’s outlook adds to evidence that record-high oil prices are slowing demand in the industrialized world and follows other forecasts that a strain on supplies may ease in 2009. Oil hit a record $147.27 a barrel last week.
Demand will rise by 1.03 million barrels per day (bpd) this year, 70,000 bpd less than the previous forecast, the report by OPEC economists said. The previous reductions were in June, May and February.
In its first look at 2009 in the monthly report, OPEC said world consumption would rise by 900,000 bpd next year while supply from non-member countries would expand at a faster rate of 940,000 bpd.
China will make the largest contribution to world demand growth in 2009 while consumption in members of the Organization for Economic Co-operation and Development (OECD) is expected to fall, OPEC said.
This year, a drop in demand for fuels such as gasoline in the United States due to high prices and the slowing economy is expected to weigh on consumption, despite growth in China, India and the Middle East.
Oil reversed an earlier gain and fell on Tuesday. U.S. crude was down 80 cents at $144.38 a barrel as of 10:25 a.m. EDT.
OPEC, source of two in every five barrels of oil, is the latest forecaster to point to easing pressure on the world market next year.
The International Energy Agency, adviser to 27 industrialized countries on energy policy, said last week global demand would rise by 860,000 bpd in 2009, less than 890,000 bpd this year.
According to OPEC, consumers will need 31.24 million bpd of oil on average from its members next year, down 710,000 bpd from 2008. That will boost the group’s reserve production capacity and could moderate prices, it said.
The exporter group blames factors such as political tension and the weakening U.S. dollar for the surge in prices. Consumers such as the United States, by contrast, say current prices reflect a tight market.
OPEC again trimmed its estimate for supply from non-member countries in 2008, citing lower output from Russia, Brazil and Mexico. It expects production to rise by 580,000 bpd, 110,000 bpd less than previously thought.
The 13 OPEC members produced 32.3 million bpd in June, the report said, more than demand for its crude and, if sustained, enough to build up inventories and make up for any further shortfall outside the group.
Some OPEC officials said it was far from clear if the supply and demand balance would ease in 2009 given threats to supply in Nigeria and Iraq and concern about Iran’s dispute with the West over Tehran’s nuclear work.
“The uncertainty on the supply side is even more than the possibility of softening demand,” Shokri Ghanem, head of Libya’s OPEC delegation, told Reuters. “There are so many uncertainties.”
Reporting by Alex Lawler; editing by Anthony Barker