–2011 Demand Growth Forecast Now +1.1m b/d From +1.2m b/d Previous Est.
–Projects US Economy To Grow by 1.6% In 2011 Vs +1.8% Previous Estimate

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

Required Crude Supply For Q3 & Q4 Revised Down

The weaker economic recovery is negatively impacting oil demand.
The global demand growth forecast for 2011 has been revised down by 0.3
mb/d since the start of this year to stand at 1.1 mb/d. The US summer
driving season missed its peak, sliding by 2% year-to-date compared to
the same period last year. The OECD economic slowdown has negatively
affected oil demand in China, while India oil consumption has been
dampened due to measures aimed at limiting the overheated economy in the
country. In the third quarter, Chinese oil demand growth is estimated to
shrink by 0.2 mb/d versus the last assessment.

Looking ahead, the perception of market tightness and worries of
supply shortages in the fourth quarter appear to be easing. The
increasing risk of the global economic slowdown is negatively impacting
industrial sectors. The middle distillates market looks well supplied as
US refineries run at high levels. This has contributed to a build in
inventories, which have been trending above five-year average, providing
a comfortable cushion ahead of the expected increase in heating oil
consumption in the winter season.

In the wake of reduced global economic growth, which has led to a
downward revision in oil demand, the required crude supply has been
revised down in the third and fourth quarters at a time when OPEC crude
oil production continues to increase and the partial return of Libya
production is expected soon. While current OPEC production profile
provides sufficient flexibility to take into account the existing
uncertainties and downside risks, it is of critical importance to
continue carefully monitoring oil market developments.

—

Demand For OPEC Crude

Demand for OPEC crude in 2011 has been revised down by 0.1 mb/d
from the previous assessment, as the downward adjustment in global
demand outpaced the downward revision in non-OPEC supply. All the
quarters saw a revision with bulk of the adjustment occurring in the
third quarter. At 29.9 mb/d, the demand for OPEC crude stood at 0.2 mb/d
above 2010. On a quarterly basis, 1Q11 showed growth of 0.6 mb/d, while
2Q11 remained unchanged. 3Q11 is estimated to see negative growth of 0.4
mb/d while 4Q11 is seen to show growth of 0.3 mb/d compared to the same
period last year.

The demand for OPEC for 2012 is projected to average 30.0 mb/d,
following a downward adjustment of 0.1 mb/d from the last report. This
downward revision was due to lower than expected world oil demand.
Within the quarters, the bulk revision came from the third quarter. As a
result, required OPEC crude is now forecast to increase by 0.1 mb/d in
2012. On a quarterly basis, 1Q12 is estimated to see growth of 0.2 mb/d,
followed by a contraction of 0.5 mb/d in 2Q12. Both the third and the
fourth quarter are forecast to see an increase of 0.4 mb/d and 0.5 mb/d
respectively, compared to the same period this year.

—

OPEC Crude Oil Production

Total OPEC crude oil production averaged 29.92 mb/d in August,
according to secondary sources, up by 75 tb/d from the previous month.
OPEC production, not including Iraq, stood at 27.29 mb/d, an increase of
85 tb/d over the previous month. Crude oil production from Nigeria,
Saudi Arabia, Kuwait, and the UAE supported the increase in August while
crude output from Angola, and Libya fell.

—

Non-OPEC Supply

Non-OPEC oil production is expected to increase by 0.50 mb/d over
the previous year to average 52.79 mb/d in 2011. The forecast represents
a downward revision of 40 tb/d compared to the previous Monthly Oil
Market Report (MOMR). The majority of the downward revisions concerned
the FSU, Developing Countries and China, while Canada, the UK,
Azerbaijan and Argentina received the largest downward revision compared
to the previous month. There were a few upward revisions that partially
offset the downward moves. In addition, a few historical revisions were
made to 2010 supply numbers to adjust for new data.

On a regional basis, North America is expected to exhibit the
largest growth in 2011 followed by Latin America, while OECD Western
Europe is expected to exhibit the largest decline. On a quarterly basis,
non-OPEC supply is expected to stand at 52.85 mb/d, 52.00 mb/d, 52.89
mb/d and 53.41 mb/d, respectively.

(2 of 2)

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

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