Oil demand will not grow in line with global economy, OPEC says

Global oil demand will not grow in line with the world economy this year, the Organization of the Petroleum Exporting Countries (OPEC) said Tuesday, reacting to an upward revision of the International Monetary Fund's (IMF) forecast, DPA reported.

In its latest monthly market report, Vienna-based OPEC said demand for crude oil would grow by 1.12 per cent, only 0.06 percentage points higher than the previous assessment.

In April, the IMF predicted global economic growth of 4.2 per cent in 2010, up from a January forecast of 3.9 per cent.

OPEC analysts do not expect the industrial sector to fully recover until the end of the year. In addition, the transportation sector could suffer if government stimulus plans run out and if petrol prices are too high.

"Although the recent upward revision to GDP (gross domestic product) must be matched with oil demand, the increase in oil demand will be less as the factors mentioned above are likely to suppress it," the OPEC report said.

The 12-country oil cartel estimated global demand at 85.38 million barrels per day (bpd) in 2010. One barrel equals 159 litres.

Meanwhile, oil markets were seen as being oversupplied by 1.1 million bpd in the first quarter, from producers within and outside OPEC.

OPEC members increased their production in April by only 0.01 million bpd from the previous month, to 29.25 million bpd. Higher output in countries such as Venezuela, Nigeria and Saudi Arabia was partly offset by decreases in Iraq, Iran and Angola.

The group's basket price regained some recent losses and reached 78.08 dollars on Monday, according to OPEC's latest available quote. The price climbed 1.67 dollars per barrel as stock markets reacted positively to the decision by EU countries on a huge financial safety net to protect the euro.