–Slowing Pace Of Oil Dmnd Grwth Further Proof Oil Mkt Is Well Supplied
–World Econ Grwth Forecast Revised to +3.3% from 3.4% Previous Estimate
WASHINGTON (MNI) – The following is the first part of excerpts from
OPEC’s Monthly Oil Market Report for April released Thursday:
World Economic Growth Outlook
World economic growth for 2012 has been revised down to 3.3% from
3.4%. US growth remains unchanged at 2.2% in 2012 amid a continuing
improving trend. The forecast for Japan also remains at 1.8% with the
recovery gaining traction. The Euro-zone’s economic growth continues to
decline and the forecast for 2012 now shows a contraction of 0.3%, down
from minus 0.2% previously. Inflation in India remains a concern, which
combined with an expected slowdown in output activity, has led to a
downward revision to the 2012 forecast to now stand at 6.9%. China’s
expansion remains at a solid 8.2%. With continued concern in the
Euro-zone and the softening in the emerging markets, the outlook for the
global economy remains fragile.
—
More recently, some encouraging signs have pointed at a
stabilisation of the slowdown in economic activity, as can be seen in
the global purchase manager’s index for manufacturing, as well as in the
development of global industrial production, which has stabilised at
around 4% for the third consecutive month in January. Moreover, the US
is at present experiencing better-than-expected momentum and, along with
the recovery in Japan and higher exports from Germany, this should
provide some support for the global economic recovery. Another positive
development is that the current momentum is being driven by a much
healthier consumer-led expansion rather than the stimulus-induced growth
seen over the past two years. Additionally, after a period of political
unrest last year, the MENA region is expected to recover in 2012, which
could further support global growth. Finally, if the situation were to
worsen again, additional monetary and fiscal stimulus in the developing
economies remains an option.
Still, many challenges remain. First, the Euro-zone remains fragile
due to persistently high levels of unemployment at a record level of
10.8% in February and continued worries about sovereign debt levels.
While the economic situation seems to be under control, new worries
might emerge given the upcoming elections in France, Greece, and the
referendum in Ireland on the fiscal union, all of which might have an
influence on the future development of the Euro-zone economy. The US
economy while improving is still faced with a relatively weak labour
market. Japan has recorded improvements in domestic sales and exports,
but it remains to be seen whether the economy is able to see a
considerable rebound this year. Developing and emerging economies
continue growing at a much higher rate averaging 5.2% compared to 1.4%
in the OECD economies but the momentum is slowing, either
deliberately, as in the case of China which is seeking to avoid
overheating, or unintentionally, as in the case of India and Brazil.
Given the uncertainties surrounding the global economy, the
forecast for world oil demand growth has been revised down from an
initial 1.3 mb/d to currently stand at 0.9 mb/d. Coming amid higher OPEC
production and rising non-OPEC supply, the slowing pace of oil demand
growth provides further evidence that the oil market is well supplied.
Given real market circumstances, it is clear that the existing high
prices cannot be justified by the current market fundamentals. Instead,
it is more the impact of geopolitical factors and a perceived shortage
of oil rather than evidence of any actual or impending shortfall
that is keeping prices high. These fears, amplified by speculative
activity, remain a key driver pushing prices higher. In light of the
challenges facing the world economy and efforts to keep the fragile
recovery on track, producers and consumers share a clear interest in
alleviating excessive oil price volatility and working together to
enhance stability in the oil market.
—
2012 World Oil Demand Outlook
Various economic developments worldwide are almost offsetting each
other, leaving the total oil consumption picture nearly unchanged from
last month. Indicators are pointing towards a stabilizing world economy,
although concerns remain for the Euro-zone. Hence, the world oil demand
forecast is unchanged from the last estimate, with growth for 2012 put
at 0.9 mb/d y-o-y, to average 88.6 mb/d.
There was low demand in some regions, especially in North America;
however, this was offset by an increase in demand in other regions, such
as OECD Pacific, China and India. Other regions, such as the Middle East
and Latin America, continue to perform as expected in 2012.
The risk still exists, especially with the recent volatility in oil
prices, that US oil demand has placed huge uncertainty on the existing
demand assessment. The upcoming driving season might be affected by
retail gasoline prices and economic development; hence, the country’s
oil demand would show a further decline.
—
Demand For OPEC Crude
The demand for OPEC crude for 2012 is projected to average 30.0
mb/d, unchanged from the last report, as both world oil demand and
non-OPEC supply saw only minor adjustments. Within the quarters, only
the fourth quarter experienced a downward revision of around 0.1 mb/d,
while the others remained at the same level as in the previous report.
Compared with the same time last year, the first, third and fourth
quarters are projected to see negative growth of 0.1 mb/d, while the
second quarter is expected to remain unchanged.
—
OPEC Crude Oil Production
Total OPEC crude oil production averaged 31.31 mb/d in March,
according to secondary sources, an increase of 136 tb/d from last month.
The crude oil output increased from Iraq, Libya, Nigeria, and Saudi
Arabia, while crude production from Angola and Iran decline in March
from the previous month.
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** Market News International Washington Bureau: 202-371-2121 **
[TOPICS: MI$$$$,MI$OI$,M$$CR$,MAUDS$]
