Opec lowers its oil demand projections for 2008

The Opec oil cartel on Friday lowered its projections for growth of oil demand this year in response to a slowdown in world economic momentum.

The Organisation of Petroleum Exporting Countries in its February report said demand would likely grow by 1.43 per cent this year rather than its previously estimated 1.52 per cent.

The cartel said average daily demand growth would come to 1.23 million barrels, taking demand to 86.99 million barrels a day. In January Opec put the overall figure at 87.07 million barrels.

"Risks to the world economy have increased considerably in January on mounting evidence of a slowdown in the US economy, fuelling fears of an outright recession with uncertain repercussions for the rest of the world," the report said.

The increase in oil consumption in 2008 is projected to approach that of 2007, when it came to 1.2 million barrels a day, or a rise of 1.4 per cent, according to an earlier Opec estimate that the cartel it kept unchanged in the February report.

The organisation said it foresaw a decline of 400,000 barrels a day in demand for its own oil, which should come to 31.5 million barrels a day this year from 31.9 million in 2007.

The report put current Opec production at close to 32 million barrels a day, which it said "should help to further ease market fundamentals."

The current Opec president, Chakib Khelil of Algeria, said Wednesday that the cartel would not approve an increase in output at its next ministerial meeting in Vienna March 5.

Opec also lowered its estimate of output growth in non-Opec producers to 1.07 million barrels a day this year from 1.08 million in a previous projection. Total non-Opec production is expected to come to 50.53 million barrels a day.

The organisation said that relatively high crude prices, which surged above the symbolic barrier of $100 a barrel in early January, should not have a major effect on demand.

World oil prices fell in Asian trade on Friday on continuing concerns about the ailing US economy, dealers said.

In afternoon trade, New York's main contract, light sweet crude for delivery in March fell 34 cents to $95.12 per barrel.