The Organization of the Petroleum Exporting Nations ‘ is forecasting a flat market for oil due to slow growth in emerging nations. OPEC s’ latest monthly outlook projects world oil demand to increase by 900,000 barrels a day unvaried from its prior report.
In its prediction issued today , OPEC determined “the low rate of expansion in the OECD economies is adversely influencing oil demand.”
The forecast goes on to assert that while the U.S. Economy has improved, the Eurozone’s debt crisis continues and along with higher oil costs has ended in substantial doubts for future oil requirement for the remainder of the year.
The basic forces driving the world oil market were broadly stable in Feb, thanks to the standard pattern of consumption expansion in China balancing weaker demand in the West. This standard pattern of consumption, contradicts political tensions between Iran and the West, over the Islamic nations’ nuclear program, which pushed the average OPEC oil price to a three-year high late last month.
The bullish effect of the Iranian embargo is undercut by the negative oil price effect of continued weakening demand in Europe and the U.S.
As always, OPEC shied away from talking about the Iranian situation and instead highlighted economic and manufacturing weakness in Europe as the key doubt in the oil market.
“U.S. Oil consumption data for December showed a 4.6% yearly contraction, the worst noted since July 2009,” OPEC reported.
Preliminary weekly info for Feb 2012 has displayed similar contractions.
“Europe’s oil demand declined in Jan and looks sure to keep falling in coming months.
OPEC predicts a contraction of 1.7%, or 240,000 barrels a day, in Europe’s oil demand in 2012. Balancing this is consumption expansion in The Eastern countries including additional demand in Japan, which shut down most all of its nuclear reactors following the Fukushima meltdown last year. China also boosted its demand in Jan by adding 800,000 barrels a day of crude oil and refined products to its commercial and strategic storage.
Analysts have determined that China could absorb into their strategic storage up to 600,000 barrels a day of Iranian oil. Chinese imports of Iranian oil slid by 90,000 barrels a day in January , adding to a 40,000 barrels a day decline just a few months before.
Last week the Chinese Premier noted a reduction of almost 2% in China’s forecast growth for 2011. This reduction will have a major effect on the demand for Oil and OPECs forecasts.