Opec cuts forecasts on weak global economy

The Opec oil cartel cut its world demand forecasts for 2011 and 2012 for the third time in a row yesterday, citing uncertainty in the global economy and weaker demand from China and India.

The Organisation of Petroleum Exporting Countries revised its 2011 estimate down to 87.81 million barrels per day (bpd), although it remained 0.88 million bpd up from last year.

In September, the cartel had set world oil demand for this year at 87.99 million bpd.

“The economic downturn is taking its toll on world oil demand, especially in the OECD (group of developed countries).” OPEC said in its monthly report.

Lower US demand, on the back of a weak economy and high unemployment, along with the eurozone debt crisis and delayed reconstruction efforts in Japan after March’s earthquake and tsunami disaster, also had a bigger than expected impact on demand, the cartel said.

For 2012, it put demand at 89.01 million bpd, down from its September forecast of 89.26 million bpd.

Demand from major emerging-economy consumers was also expected to remain low.

“Chinese oil demand is facing uncertainties because of new government policies aimed at reducing transport fuel use and India’s increase in retail prices is expected to play a major role in dampening oil consumption in the coming year,” OPEC said.

Beijing recently scrapped incentives that encouraged new car sales and has introduced measures to encourage more fuel-efficient vehicles, it noted.

Ahead of the report yesterday oil inched lower. New York’s main contract, light sweet crude for delivery in November, fell 10 cents to $85.31 per barrel in the afternoon. Brent North Sea crude for November slipped 22 cents to $108.73.