–2012 Demand Growth Forecast Now +1.19m b/d From +1.27m b/d Prev Est.
WASHINGTON (MNI) – The following is the first part of excerpts from
OPEC’s Monthly Oil Market Report for October released Tuesday:
Growing economic uncertainties impact oil price volatility
When the global growth forecast for 2011 was first published in
July 2010, growth expectations stood at 3.7%. While this is only
negligibly higher than the current forecast of 3.6%, it masks the fact
that the slowdown in advanced economies has been sharper than expected.
OECD growth expectations for 2011 currently stand at 1.6%,
significantly lower than the initial forecast of 2.0%. The US, in
particular, has faced a much more challenging first half than originally
anticipated. The tragic events in Japan have also impacted growth
expectations. While the Euro-zone performed relatively well initially,
sovereign debt challenges in some countries in the region have emerged
as a key threat going forward. This indicates that the related issues
are deeper than originally thought and that solving them might be far
costlier than previously forecast. Even if the fallout is contained, the
sovereign debt crisis is likely to result in much slower economic growth
in the Euro-zone over the months to come as austerity measures weigh on
the expansion. The risks for the Euro-zone are considerable, given major
refinancing volumes of the financially weaker Euro-zone countries in the
coming quarters combined with rising yields. Consequently, the global
growth forecast for 2012 has been adjusted sharply lower since the first
estimate in July 2011 of 4.1% to currently stand at 3.7%.
…
Reflecting the growing uncertainties in the global economy, world
oil demand in 2011 has also been adjusted lower from the initial
forecast growth of 1.2% to now stand at 1.0%. However, the revisions
since the initial forecast have been much lower than other forecasts
which began the year with a more optimistic economic outlook. The
adjustments have been carried out not only in OECD countries, but also
in some emerging countries, including China, which has been a key
driving force behind global oil demand growth in recent years. So far,
clear signs of weakening demand have had only a limited impact on
overall oil market fundamentals. However, in the current economic
environment, it is necessary to remain alert to the risks of a growing
market imbalance.
—
2011 World Oil Demand Growth Outlook
The economic downturn is taking its toll on world oil demand,
especially in the OECD. The decelerating US economy, high unemployment
rate and feelings of uncertainty among consumers, has damped US oil
demand. Similarly, debt problems in the Eurozone are causing EU
economies to lose some of their estimated growth this year. Furthermore,
the delay in Japans rebuilding efforts is contributing to the
lower-thanexpected oil demand. The above factors are likely to reduce
OECD oil demand growth by some 0.1 mb/d this year. Our initial world oil
demand growth estimate was 1.0 mb/d; however the above factors have
pushed world oil demand further down than expected.
…
The uncertainty for the short term still exists, making US oil
demand the wild card this year. This might further weaken world oil
demand in the fourth quarter. The world oil demand estimate was revised
down by 0.18 mb/d to show growth of 0.9 mb/d in 2011, averaging 87.8
mb/d.
—
2012 World Oil Demand Growth Outlook
Uncertainty in the world economy has dimmed the economic outlook
for the coming year. As a result, the world GDP forecast for next year
has been revised down further. Most of the uncertainty is attributed to
the OECD region. US oil demand is likely to play a major role in total
world oil demand next year. Retail petroleum product prices are expected
to be the second major factor affecting oil demand in the coming year.
Should retain prices persist in current levels, then transport fuels are
likely to be affected, particularly in the US.
European oil demand is not expected to show any growth next year.
This reflects not only a slowing economy, but also other factors such as
high taxes on oil. The EU taxes on energy are the highest, representing
more than 60% of the sales price.
Chinese oil demand is not expected to be as solid as usual because
of new government policies aimed at reducing transport fuel use. Indias
increase in retail prices is playing a major role in easing domestic oil
consumption next year. The Middle East and Latin America are expected to
maintain the same trend as this year, supported by growth in Saudi
Arabia and Brazil.
Due to the recent downward revision in the world GDP, next years
oil demand growth forecast was revised down by 70 tb/d to stand at 1.2
mb/d y-o-y to average 89.0 mb/d.
As mentioned before, next years oil demand forecast is based on
assumptions such as higher global GDP, higher retail petroleum product
prices and a strong Chinese economy. However, due to the uncertainty in
the world economy in 2012, next years oil demand forecast implies two
scenarios with the risks leaning primarily to the downside. A
worse-than-expected performance of the US economy might drag down world
oil demand growth by as much as 0.2 mb/d.
—
World Economic Growth Outlook
World economic growth remains unchanged at 3.6% in 2011 and has
been revised down to 3.7% in 2012. At least for now, the deceleration of
global output seems to have stabilized, although many risks remain,
particularly in the Euro-zone. The US is forecast to grow at 1.6% in
2011 and at 1.8% in 2012. The Euro-zone is now expected to expand by
1.6% in 2011, but by only 0.8% in 2012. Japans economy is expected to
recover by 2.4% in 2012, after a contraction of 0.8% in 2011. However,
the magnitude of the recovery remains uncertain. Growth levels in the
developing countries remain relatively high, although a slow-down effect
from the policy measures has started to have an impact. While China
remains unchanged at 9.0% for 2011 and 8.5% for 2012, Indias forecast
has been revised lower to 7.6% for both 2011 and 2012.
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** Market News International Washington Bureau: 202-371-2121 **
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