OPEC Text: Still Expects 2012 Oil Demand To Grow 0.9M B/D -2

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WASHINGTON (MNI) – The following is the second and final part of
excerpts from OPEC’s Monthly Oil Market Report for April released

World Oil Supply

Preliminary figures indicate that global oil supply increased 0.24
mb/d in March to average 89.51 mb/d. Non-OPEC supply experienced an
increase of 0.10 mb/d in March compared to the previous month. The share
of OPEC crude oil production encountered a minor increase to 35% in
March. The estimate is based on preliminary data for non-OPEC supply,
estimates for OPEC NGLs and OPEC crude production based on secondary

Non-OPEC Supply

Non-OPEC supply is expected to increase by 0.58 mb/d to average
52.97 mb/d in 2012, representing an upward revision of 30 tb/d from the
previous MOMR. However, the forecast growth experienced a downward
revision of 30 tb/d from last month, as the historical upward revision
to the 2011 supply estimate influenced the growth in 2012. In absolute
terms, total non-OPEC oil supply is expected to be higher than in the
previous assessment. Compared with the previous month, the undertaken
upward revisions had an impact in the first, third and fourth quarters
of 2012, while the second-quarter supply outlook encountered a downward
revision. The first-quarter projection experienced the largest upward
revision, driven mainly by adjustments to actual production data, as
well as changes to some countries’ supply profiles.

The OECD supply forecast had the highest upward revision, while
Developing Countries experienced the largest downward adjustment from
the previous MOMR. On a regional basis, North America’s supply is
expected to witness the highest growth among all the non-OPEC regions in
2012, followed by Latin America and the FSU, while Middle East supply is
expected to experience the largest decline, followed by Africa and OECD
Europe. On a quarterly basis, non-OPEC supply is expected to average
52.81 mb/d, 52.68 mb/d, 52.97 mb/d and 53.43 respectively.

US Oil Demand

US economic activity is still pushing oil demand growth into the
negative. Most of the decline is related not only to the transport
sector, but also to industry. The latest monthly US oil consumption data
for January shows a 4.3% y-o-y contraction, the second-highest (after
December 2011) observed since July 2009. The usage of some industrial
and transportation fuels, especially distillates and gasoline, accounted
for the bulk of this contraction. The first quarter was generally quite
disappointing for consumption, showing contractions in all product
categories, especially motor gasoline, distillates and residual fuel
oil. The main factors influencing consumption were ongoing economic
concerns, relatively high fuel prices and a warmer-than-usual winter. In
weekly terms, preliminary data for February and March indicates similar
contractions in consumption, with March demand plunging by more than 1

The outlook for consumption in 2012 remains rather pessimistic, and
will depend on the development of the economy and the price levels of
transportation fuel. US oil consumption is a factor that imposes a major
risk to the total world oil demand forecast this year.

China Oil Demand

China has been floating domestic oil product prices to some degree,
using a certain formula, and this mechanism has exposed end-users to
international oil prices. However, this does not apply to all products
and the government tends to delay increases to avoid high inflation.
China has been importing a significant amount of oil in the past two
months. This has mostly ended up in storage. The country’s monthly oil
imports rose by 18.6% in February y-o-y. In February alone, China stored
0.8 mb/d of crude and products. This stockpiling has been seen since
November. On average, China stored 0.56 mb/d, or 68 mb, of oil over the
past four months. Almost 57% of the stored oil is diesel. Based on our
methodology, stored oil is not counted as part of the country’s
consumption. Hence, China’s oil demand growth for February is forecast
at 0.67 mb/d y-o-y, averaging 9.7 mb/d.

The country’s oil demand for the year is forecast to grow by 0.4
mb/d, or 4.2%. This trend is similar to what has been seen over the past
few years.

(2 of 2)

** MNI Washington Bureau: 202-371-2121 **



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