OPEC Leaves 2009 Oil Demand Growth at Lowest Rate in 7 Years

By Grant Smith

Aug. 15 (Bloomberg) -- The Organization of Petroleum Exporting Countries, the supplier of more than 40 percent of the world's oil, left its forecast for 2009 oil demand growth unchanged at the lowest rate in seven years and warned that consumption may fall further.

The 13-member group left the rate at 1.03 percent, the narrowest since 2002, even after raising its estimates of daily demand in 2008 and 2009 by 90,000 barrels, according to a monthly oil market report today. Oil prices have declined more than 20 percent from last month's record because of a ``softening of oil market fundamentals,'' it added.

``Risks to the outlook for the world oil market appear to be on the downside,'' OPEC said in the report. ``The outlook for the world economy has deteriorated further as more evidence of a global slowdown emerged.''

Global oil consumption will average 86.9 million barrels a day this year and 87.8 million barrels a day in 2009. The increase for 2008 ends a run of downward revisions in six previous OPEC reports.

The slower rate of demand growth in 2009 is due to ``a major slowdown in transport and industrial fuel consumption not only North America'' but also Europe and parts of Asia, it said.

Earlier this week, the International Energy Agency, an adviser to 27 nations, raised its 2009 forecast for global oil demand by 70,000 barrels to 87.8 million barrels a day.

OPEC Call

The call on OPEC's crude next year will average 31.33 million barrels a day, an increase of 90,000 from its previous estimate, as world consumption is revised up while non-OPEC output projections are little changed.

The group will discuss output at OPEC's next scheduled ministerial meeting in Vienna on Sept. 9.

Total OPEC crude production averaged 32.643 million barrels a day in July, an increase of 235,800 barrels from June, because of additional flows from Saudi Arabia, Iraq, Nigeria, Kuwait and the United Arab Emirates.

Saudi output increased by 162,200 barrels a day in July to 9.513 million barrels a day. Saudi Arabia, responding to calls from consuming nations including the U.S., said it would produce an extra 300,000 barrels a day in June and another 200,000 barrels a day in July.

OPEC may consider cutting production at its September meeting to reduce an excess in the market, Iranian OPEC governor Mohammad Ali Khatibi said Aug. 12.

`Too High'

Kuwait's oil minister has said any quota decrease is unlikely, and Ecuador said it would be unnecessary. Last month, OPEC President and Algerian Oil Minister Chakib Khelil said there was no need to lower output because prices are ``too high.''

Other members of the group including Saudi Arabia, its largest and most dominant, have yet to express a view on next month's decision.

OPEC made a ``slight downward revision'' of 10,000 barrels a day to its assessment for 2008 oil supply from outside the 13- member group, bringing it to 50,000 barrels a day. Non-OPEC output will increase to an average of 51 million barrels a day next year, it said.

The OPEC members are Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.

Indonesia said three months ago that it will pull out of the group as declining production forces it to boost oil imports.

To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net