VIENNA (MNI) – Slowing oil demand growth next year and projected
increases in non-OPEC supply point to a “comfortable market situation,”
the Organization of the Petroleum Exporting Countries said Wednesday.

OPEC expects global demand to rise by 0.8 million barrels per day
(mb/d) next year to an average of 89.5 mb/d after a 0.9 mb/d increase
(unrevised) this year. It sees non-OPEC supply rising 0.9 mb/d as well
to 54.0 mb/d after projected growth of 0.7 mb/d this year.

Demand for OPEC crude next year is seen down 0.3 mb/d next year to
29.6 mb/d after a projected decline of 0.1 mb/d this year.

“Based on the above forecasts, the projected growth in oil demand
in 2013 will largely be met by incremental non-OPEC supply, indicating a
comfortable market situation next year,” the organization said in its
monthly Oil Market Report.

“The current high level of stocks in the OECD, combined with rising
inventories in the non-OECD, should also provide an additional cushion
to the market,” it said.

OPEC supply declined by 106,000 b/d in June to 31.36 mb/d,
according to estimates of secondary sources cited in the report. [Platts
estimates the monthly decline at only 30,000 b/d to 31.72 mb/d.]

At the outset of its report, the organization highlighted the “very
significant” 13% drop in its reference basket price for crude in June to
$93.98 per barrel – the first dip below $100 in 18 months and the
steepest monthly drop since global economic shock in December 2008. It
noted a “hefty decline” of $23.80 for Nymex WTI in 2Q and of $28.62 for
ICE Brent.

“In addition to economic concerns, especially regarding the
Eurozone, the main factors driving down prices were the decline in
speculative long positions and abundant crude oil supplies,” it
explained.

OPEC confirmed its projection for global economic growth this year
of 3.3% and forecast 3.2% growth next year. It trimmed its growth
projection for the US this year by another 0.1 point to 2.1% and
forecast 2.0% next year. It hiked its projection for Japan this year by
half a point to 2.5% and forecast 1.2% in 2013. The Eurozone economy is
seen contracting 0.4% this year and recovering by 0.1% next year. China
is seen growing 8.1% this year and 8.0% next year, while growth in India
is seen accelerating from 6.4% to 6.6%.

Oil demand growth next year would be limited to emerging economies,
with industrial and petrochemical consumption the main drivers. In terms
of products, diesel and naphtha are expected to grow the most.

The bulk of gasoline demand next year is seen coming from rising
transportation consumption in non-OECD countries, with some contribution
from the OECD regions of North America and the Pacific. “US gasoline
demand is expected to see a slight improvement next year, however the
forecast could be negatively affected by the pace of the country’s
economic recovery,” the report said.

The US, Canada, Brazil, Kazakhstan and Colombia are expected to be
the main sources of non-OPEC to supply growth next year, while Norway,
Mexico and the UK would see the largest declines.

– Paris newsroom +331 4271 5540: ssandelius@marketnews.com

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