Opec hikes oil demand before output meeting

Opec hiked its forecast for world oil demand growth yesterday ahead of its output meeting in Vienna and after the cartel’s most influential member Saudi Arabia expressed satisfaction with current prices.

The Organisation of Petroleum Exporting Countries raised its demand growth estimate for 2010 from 1.2 to around 1.3 per cent and held steady its forecast for next year, as the cartel that pumps 40 per cent of crude oil prepares for its meeting tomorrow.

“Despite some turbulence and setbacks, the global economic recovery continues to provide support for oil consumption,” Opec said in its October monthly bulletin.

The cartel said it was pencilling in world oil demand growth of 1.13 million barrels per day (bpd) or 1.34 per cent to 85.59 million bpd for the whole of 2010, “driven by the stronger-than-expected, stimulus-led economic growth in the first half of the year”.

In 2011, oil demand would then increase by a further 1.05 million bpd or 1.2 per cent to 86.64 million bpd, unchanged from the previous forecast, Opec predicted.

Crude oil prices, which tumbled from historic highs of more than $147 in July 2008 to about $32 in December of that year in response to the global recession, have since clawed back on economic recovery hopes.

Oil has traded roughly between $70 and $80 for the past year – a level deemed reasonable by Opec members still faced with an uncertain demand outlook as countries struggle to recover from the recession.

Benchmark oil prices were trading between $81.60 and $83.25 yesterday.

Opec ministers have begun arriving in the Austrian capital for a regular meeting later this week to decide whether to change production levels.

All indications suggest there will be no change.

Saudi Oil Minister Ali al-Nuaimi said he was satisfied with the current price of oil and saw no reason to change output quotas, as he arrived in Vienna late on Monday.

“The market is very well balanced, everybody is happy with the market, consumers, producers: very happy,” Saudi Arabia’s Oil Minister said.

“I think the supply is adequate and the demand is quite active,” he added.

Qatar’s Energy Minister Abdullah bin Hamad al-Attiyah, speaking to reporters in Doha, said current oil prices were “comfortable” and that Opec will most likely maintain output levels tomorrow, a view echoed by Libya.

Opec has had an official production level of 24.84 million barrels a day since January 2009 after a massive cut in output that was aimed at halting a slide in prices.