OPEC Raises Forecast, Optimistic About U.S.
OPEC on Monday raised its forecast for demand for its oil this winter and said it appeared more likely that top consumer the United States would avoid a steep economic slowdown.
The group's latest assessment of the oil market comes as investor concern about the U.S. economy is easing, despite a surge in oil prices to an all-time peak above $85 a barrel.
World stock markets on Monday were trading within sight of record highs.
"It now appears more likely than that the U.S. economy could weather the financial crisis without a sharp downturn in economic activity," said the report by OPEC economists at the group's Vienna headquarters.
OPEC, in its October Monthly Oil Market Report, said demand for its crude oil will average 31.43 million barrels per day in the fourth quarter of 2007, up 100,000 bpd from the previous estimate.
The Organization of the Petroleum Exporting Countries also sees higher demand early next year. It raised the estimated need for its crude in the first quarter by 120,000 bpd to 31.17 million bpd.
OPEC had earlier this year raised concern that a slowing U.S. economy and fallout from the subprime mortgage crisis could take a wider economic toll and cut oil consumption.
The group predicted an easing of upward pressure on prices as members pump more and as the Atlantic hurricane season, which often prompts oil firms to shut Gulf of Mexico oil rigs, draws to a close.
"Overall, the current supply and demand forecasts predict that the market will be fundamentally balanced over coming quarters," said the report.
Steady Growth in Demand
Oil hit a record high of $85.19 a barrel earlier on Monday and was up more than a dollar at $84.92 a barrel as of 8:09 ET.
OPEC, source of more than a third of the world's oil, left its forecast for world oil demand growth next year little changed at 1.3 million bpd, much lower than some projections.
The International Energy Agency, an adviser to 26 industrialized countries, said in its own monthly report last week that demand would surge in 2008 by 2.1 million bpd.
OPEC in the report made only minor changes to its world economic growth forecast, trimming the estimate for growth in 2008 to 4.9 percent from 5 percent previously expected.
It trimmed a projection for supply from non-member countries in the last quarter of 2007 by 110,000 bpd to 51.04 million bpd and left the outlook for 2008 little changed.
The group is set to raise oil output by 500,000 bpd from Nov. 1, a move that followed months of pressure from the IEA, and Monday's report showed supply edging up.
OPEC's 10 members bound by production agreements pumped 26.73 million bpd in September, the report said citing secondary sources, up from 26.681 million bpd in August.