–Now Expects 2012 Oil Demand To Grow By 1.1 Million Barrels Per Day

WASHINGTON (MNI) – The following is the first part of excerpts from
OPEC’s Monthly Oil Market Report for December released Tuesday:

2012 Outlook

World oil demand growth in 2011 now stands close to the initial
forecast, following upward and downward revisions earlier in the year.
With global oil demand currently estimated at 0.9 mb/d, this represents
a downward adjustment of just 0.1 mb/d from the initial forecast.
Although the changes came mainly from the OECD, China has also
experienced some downward adjustments. With the slowing pace of economic
growth, manufacturing activities and trade are expected to be affected
worldwide. Already, oil consumption in both the transportation and
industrial sectors has noticeably slowed. As a result, world oil demand
growth in 2012 has been revised down to 1.1 mb/d from an initial
forecast of 1.3 mb/d. This growth is subject to increased uncertainties,
associated with the conditions of the global economic recovery and risks
that are skewed to the downside.

The forecast for non-OPEC supply in 2011 encountered various
revisions in both directions. In the second and third quarters, non-OPEC
supply suffered various setbacks due to political, technical, geological
and weather factors. Non-OPEC supply is currently expected to grow by
0.2 mb/d in 2011. For the coming year, non-OPEC supply is forecast to
increase by close to 0.7 mb/d. The risk associated with the forecast
remains high on both sides, given that growth is expected to be
supported by the return to normal output in some countries from levels
curtailed due to political and technical difficulties, as well as from
unfavourable weather conditions. Despite disruptions, OPEC crude oil
production has been accommodative to keeping the market well supplied
and currently stands above 30 mb/d with sufficient spare capacity in
place. OPEC NGLs are expected to increase by about 0.4 mb/d in 2012, in
line with the growth seen in the current year.

Based on the above forecasts, incremental oil demand in 2012 will
be met by the increase in non-OPEC supply and OPEC NGLs. However,
slowing economic growth and the uncertain outlook for the global economy
in the coming year highlight increasing risks facing the oil market in
2012. This underscores the need to closely monitor the factors driving
crude oil prices not only developments in supply and demand, but also
non-fundamental factors such as macro-economic sentiment and speculative
activity to ensure that the market remains stable during this
challenging period for the world economy. These will be the factors that
OPEC Ministers will be considering at the 160th Ministerial Conference
on 14 December 2011.

—

2012 World Oil Demand Growth Forecasts

The uncertainty for the short term still exists; not only is US oil
demand seen as the wild card next year, but the situation in China is
also a factor. This might further weaken world oil demand in the first
half of next year.

…

World oil demand growth is forecast at 0.9 mb/d in 2011; however
the world oil demand forecast for 2012 was revised down by 0.1 mb/d to
show growth of 1.1 mb/d, averaging 88.9 mb/d.

—

World Economic Growth Outlook

World economic growth remains at 3.6% for both 2012 and 2011.
However, the 2012 forecast for the OECD has been revised down from 1.7%
to 1.5%, with Developing Countries helping to compensate for this
shortfall. US growth is now forecast at 1.7% for 2012 compared to 1.8%
previously. The Euro-zone remains the center of uncertainty and
therefore 2012 has been revised down from 0.7% to 0.4%. Japan is
forecast to expand by 1.9% in 2012, following a downward adjustment of
0.3 percentage points. China’s development remains relative resilient so
far and 2012 growth expectations have been increased to 8.7% from 8.5%.
India’s momentum is decelerating and growth for 2012 was lowered to 7.5%
from 7.6%. The downside risk for the world economy is evident and close
monitoring will be needed on developments in the Euro-zone debt crisis,
slowing activity in developing economies, and the still relatively weak
situation of the US economy.

—

Demand For OPEC Crude

The demand for OPEC crude in 2012 is projected to average 30.1
mb/d, about 0.1 mb/d higher than in the previous report. This upward
revision came as the downward adjustment in non-OPEC supply outpaced the
downward revision in global demand. Within the quarters, 1Q12 and 4Q12
were revised down by 0.1 mb/d, while 2Q12 and 3Q12 saw an upward
adjustment of 0.3 mb/d and 0.2 mb/d respectively. Required OPEC crude is
forecast to see an increase of about 0.1 mb/d from this year. 1Q12 is
estimated to see growth of 0.2 mb/d, followed by negative growth of 0.1
mb/d and 0.2 mb/d in 2Q12 and 3Q12 respectively. 4Q12 is forecast to see
an increase of 0.3 mb/d compared to a year earlier at the same period.

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** Market News International Washington Bureau: 202-371-2121 **

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