OPEC lowers estimated growth of world oil demand for 2007

The Organization of Petroleum Exporting Countries (OPEC) said on Friday the world demand for oil would grow by 1.5 percent, or 1.3 million barrels per day, in 2007, 70,000 barrels per day less than its previous forecast.

The cartel forecast last month that the world demand for oil would grow by 1.6 percent or an average of 2 million barrels per day to 85.46 million barrels per day.

In its latest monthly market assessment, OPEC also projected that the global demand for OPEC crude oil in 2007 was at 30.1 million barrels per day on average, a drop of 0.2 million barrels per day compared with 2006.

Although the global economy in 2006 is estimated to have expanded by 5.2 percent, the cartel said, the global economic growth is expected to slow down in 2007, due to the threat of rising inflation and the prospect of fiscal tightening in the European Union.

With increasing prognoses of a soft-landing for the U.S. economy, the OPEC report predicted the growth in the U.S. economy will slow to 2.3 percent in 2007 from 3.3 percent in the previous year.

The report attributed the recent sharp tumbles of oil prices to the mild weather in the Northern Hemisphere.

"The unseasonably warm weather in the Northern Hemisphere adversely affected product demand and exerted further downward pressure on product prices and refinery margins in various markets," it said.

OPEC believed that the mild weather would continue to undermine the European market, affecting not only the oil demand but also natural gas prices.

In order to provide further additional support for the prices and retain the balance in the crude oil market, OPEC announced that it would cut output by 500,000 barrels per day starting on Feb. 1. But the announcement failed to arrest the falling trend of oil prices.

OPEC hoped that the inclusion of its 12th member, Angola, will help the cartel fulfill its objectives and stabilize the market. It is still uncertain whether the group will call an emergency meeting to discuss and approve further cuts in production.

Source: Xinhua