OPEC Lowers World Oil Demand Growth Forecast
OPEC said on Thursday it sees a modest downturn in the U.S. economy in the fourth quarter due in part to record high oil prices, but booming growth in China and the Middle East will keep world oil demand strong.
OPEC, in its November Monthly Oil Market Report, lowered its world oil demand growth forecast for the fourth quarter by 100,000 barrels per day to 1.7 million bpd. The group's first quarter growth projection was unchanged at 1.5 million bpd.
"The strong (U.S.) economic performance in the third quarter is not expected to be repeated in the last quarter of the year," the report said.
"The U.S. consumer is facing headwinds from falling house prices, restrictions on borrowing and higher energy costs."
The Organization of the Petroleum Exporting Countries meets on Dec. 5 in Abu Dhabi to chart oil output strategy amid consumer calls for an increase in production.
'Potentially Dangerous' Prices
OPEC president Mohammad al-Hamli said today that current high oil prices are "potentially dangerous," as they are driven by factors that are beyond the 12-member cartel's control. "These prices are potentially dangerous," Hamli, who is also the oil minister of the third largest OPEC producer United Arab Emirates (UAE), told a symposium held as part of a rare OPEC summit.
Last week, oil prices raced close to the 100-dollar mark before sliding back as Organisation of Petroleum Exporting Countries' ministers prepare to hold a crucial meeting in Abu Dhabi next month to decide on the issue of output.
"OPEC is doing all it can for prices to be suitable" for consumers and producers, Hamli said. "But it is clear that factors are beyond OPEC's control." The minister attributed the rise to geopolitical tensions, weather issues, "an aggressive level of speculation" and a sharp decline in the dollar.
"There is an increasing disconnect between oil prices and fundamentals (of supply and demand)... In 2007, prices are rising although there is enough supply," Hamli said.
Slightly Tighter Stocks
Oil hit a record of $98.62 a barrel last week, but has since pulled back to below $93.
OPEC expects slightly tighter world oil stocks through the first quarter of next year.
It saw days of forward consumption declining from an estimated 52.8 days in the third qu
arter of this year to 51.3 days in the fourth quarter and 52.5 days in the first three months of next year.
"While lower, it is difficult to see how these figures represent a sign of an alarming tightness in the market," the report said.
OPEC agreed in September to boost supplies by 500,000 bpd from Nov. 1 to soothe concerns over supply tightness. But consumers, led by the International Energy Agency, insist the move was too little, too late.
OPEC blames oil's rally on an influx of financial funds into oil markets and weakness in the dollar.
"The widespread perception of current market tightness and fear of future shortages appear to be fuelling increasing speculation in the futures market," OPEC said.
"Speculative activity has grown dramatically since the middle of August."
OPEC also raised the requirement for its oil in the fourth quarter by 190,000 bpd to 31.62 million bpd, and by 180,000 bpd in the first quarter of 2008 to 31.35 million bpd.
Citing secondary sources, OPEC said supplies from top exporter Saudi Arabia had risen a "significant" 110,000 bpd in October to 8.73 million bpd.