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OPEC MOMR Sep.06Vienna, 15/9/06
Despite uncertainty on outlook for GDP and oil demand growth in the coming year as well as the expected rebound in non-OPEC supply, OPEC is ready to take the necessary steps to ensure that supply and demand remain in balance, with prices at reasonable levels to both producers and consumers, and conducive to continued healthy world economic growth, according to the OPEC Monthly Oil Market Report for September.
The report noted that in recent years oil demand growth has come mainly from the Developing Countries which have accounted for 73% of incremental demand in the years 2000-2005, with China alone responsible for 27%. This growing share highlights the need to derive accurate forecasts for oil demand of Developing Countries, the report said.
The short-term volatility in oil demand suggests closer consideration of additional factors besides total GDP growth, such as sectoral analysis and product demand, as well as estimates of short-term effects of energy policies in the current high price environment. “While these indicators apply equally to all countries, they assume even greater importance in estimating oil demand in the rapidly-changing Developing Countries,” the report said. “In the face of increased short-term fluctuations in demand and the associated demand uncertainties, OPEC has nevertheless continued to meet market needs, providing an ample supply of crude which has helped build oil inventories to comfortable levels.”
In its review of oil market developments the report said that world oil demand growth in 2006 has been revised down by 0.1 mb/d since the last MOMR to stand at 1.2 mb/d, as recent data shows weaker-than-expected demand in the first half of the year. For 2007, world oil demand growth is forecast at 1.3 mb/d or 1.5% unchanged from the previous report.
Turning to supply, the report said that non-OPEC oil supply in 2006 should average 51.1 mb/d, representing an increase of 1.1 mb/d over the previous year and broadly unchanged from the last assessment. Next year, non-OPEC oil supply is expected to average 53 mb/d, representing an increase of 1.8 mb/d versus 2006. The 2007 growth forecast remains unchanged. In August, OPEC production stood at 29.8 mb/d, an increase of 0.1 mb/d from the revised previous month.
As a result, the demand for OPEC crude in 2006 is expected to average 28.9 mb/d, representing a downward revision of 0.2 mb/d versus last month. In 2007, the demand for OPEC crude is expected to average 28.1 mb/d, representing a decline of 0.8 mb/d versus 2006.
The OPEC Reference Basket reached a record high of $72.67/b on 8 August. Since then, the Basket has fallen, dropping to $59.22/b on 14 September, representing a loss of almost $14/b, the report said.
