OPEC: Output Higher than Demand for Oil
OPEC is pumping more than enough oil to keep consumers satisfied and a potential U.S. recession could mean lower demand for its crude, the group said on Friday.
OPEC, in its monthly oil market report, said there was little risk of a rise in oil demand growth forecasts given the slowing economy of the world's top fuel consumer.
A steady stream of negative U.S. economic data has raised fears of a recession and hit the dollar, lifting the nominal prices of most commodities traded in the currency despite the risk of a downturn in underlying demand.
Oil rose to an all-time high of $111 a barrel on Thursday.
"With latest data pointing to a potential recession in the U.S., oil demand growth is not likely to be higher than projected, resulting in lower demand for OPEC crude," said the report by the Organization of the Petroleum Exporting Countries.
"At the same time, early indications clearly show that the market is amply supplied."
The group that pumps more than a third of the world's oil agreed to hold output steady at a meeting last week "despite expectations of softer fundamentals, increasing downside risks and impending lower demand season," it said.
OPEC oil ministers have long insisted that fundamentals of supply and demand are not fuelling oil's rally.
"While financial market dynamics have lifted prices to record levels, fundamentals indicate a market which is currently well-balanced and expected to soften over the coming months," the report said.
In February, OPEC's 13 members produced 32.1 million bpd.
At 31.68 million bpd, the estimated requirement for its crude for 2008 -- though raised by 150,000 bpd from the previous report -- stands below current supply.
The revised projection for the call on OPEC's crude resulted from a lower supply forecast from producers outside the group.
The report adjusted down the forecast of 2008 non-OPEC supply by 160,000 bpd to 50.37 million bpd, showing annual growth of 910,000 bpd.
Despite record prices, OPEC still expects global consumption this year to expand by 1.2 million barrels per day (bpd) to average 86.97 million bpd.
Its forecast is lower than consumer adviser the International Energy Agency which expects world demand this year to rise by 1.7 million bpd.