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OPEC raises 2011 world oil demand growth forecast

by Staff Writers
Vienna (AFP) April 12, 2011
The Organisation of Petroleum Exporting Countries (OPEC) raised Tuesday its growth forecast for world oil demand in 2011, expecting little import from recent events in Japan and Libya.

World oil demand will now grow by 1.39 million barrels per day (bpd), or 1.61 percent, to 87.94 million bpd, the cartel said in its latest monthly report.

In its previous report, OPEC put this year's average daily demand at 87.74 million bpd.

For 2010, demand was put at 86.55 million barrels per day -- up 2.0 million bpd -- it said, revising its estimate upwards slightly on the back of higher-than-expected winter consumption.

Last month's earthquake and tsunami in Japan and events unfolding in OPEC-member Libya would have little impact on the global demand figure for the year, OPEC forecast.

Japan's disaster "is expected to affect oil demand only marginally."

While the country's consumption had dropped as the transportation sector slowed and other economic sectors ground to a halt, "this is likely to be offset later in the year as the country substitutes some of its shut-in nuclear power capacity with crude-burning power generation," the cartel predicted.

"Furthermore, rebuilding operations later on will call for increased energy use."

Meanwhile, an 80-percent cut in production in Libya due to the ongoing conflict -- to just 250,000-300,000 bpd from a previous 1.6 million bpd -- was being compensated for by other OPEC producers.

"Since the supply disruption in Libya, OPEC Members have accommodated most of the shortfall in production, ensuring that the market is well supplied," the organisation said.

"The market can be assured that in the months ahead, the Organisation will continue its longstanding role of supporting oil market stability," OPEC said.

Earlier Tuesday, the International Energy Agency warned that soaring oil prices were beginning to hit demand.

"There are real risks that a sustained $100 dollars a barrel-plus price environment will prove incompatible with the currently expected pace of economic recovery," the IEA said in its monthly report.

These prices were "out of step with the realities of supply and demand," OPEC agreed.

"In terms of fundamentals, the recent events alone do not justify the current high price levels.

"Instead, these represent a sharp increase in the risk premium, reflecting fears of a shortage in the market in the coming quarters," OPEC said.

On Tuesday, Brent North Sea crude for delivery in May rose 48 cents to $124.46 a barrel in afternoon London trade.

New York's main contract, light sweet crude for delivery in May, meanwhile fell 62 cents to $109.30.

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