Rising oil prices could dampen the steadily strengthening demand for crude amid the fragile beginnings of economic recovery, the cartel of the world's biggest oil-producing countries warned yesterday.
The Organisation of Petroleum Exporting Countries (Opec) has revised its global oil demand growth estimates for 2010 upwards by 50,000 barrels per day to 750,000 barrels per day on the strength of recent improvements in the global economy. However, this year's predictions remain unchanged.
But the more positive outlook is still hedged about with caution. If prices push much higher than its current level in the high $70s per barrel, recovery may stall. Oil demand growth in the developed OECD countries could be pushed back down by more than 1 per cent, Opec warns.
"The low base in world oil demand in 2009 is suggesting a stronger increase in oil demand growth for 2010. However, a potentially weak economic recovery along with higher oil prices are the two main factors that may dampen world oil demand in the coming year," Opec's monthly oil report for October, published yesterday, says.
Even the recent economic improvements have still to prove themselves. "Fuelled by the unprecedented fiscal and monetary stimulus, OECD output is expected to show positive growth in the third quarter. Still, it remains to be seen when private consumption expenditures will pick up sufficiently as government support fades," Opec says.
The cartel has taken some 4.2 million barrels per day out of production since the recession sent oil from an all-time high of $147 per barrel to less than $30 in five months. So far, there have not been any suggestions as to when the taps may be turned back on. Opec next meets to discuss the issue in Angola shortly before Christmas.