The Organization of Petroleum Exporting Countries expects world oil consumption will grow a modest 500,000 barrels a day in 2010 after two years of shrinkage, fueled by a stronger economy and demand in China, India, the Middle East and Latin America.
In its monthly oil market report, issued Tuesday, OPEC reaffirmed its view that world demand will fall about 1.6 million barrels a day this year to 83.8 million barrels a day, compounding a small decline in 2008 as the world economy stagnates. OPEC revised demand projections for the second half of the year, however, and now anticipates declines less severe than projected last month.
"World oil demand is settling down in line with the current world economic situation," the report said.
Energy forecasters have regularly revisited assumptions in the past year as the fast-changing economic landscape altered consumption patterns and toppled crude prices from highs above $145 a barrel. OPEC has struggled to cope with rapidly declining demand, cutting official production among its 11 quota-bound members by 4.2 million barrels a day.
The cartel's report follows similar forecasts issued last week by the U.S. Energy Information Administration and the International Energy Agency, a watchdog group for most heavily industrialized countries. The EIA also expects oil demand will spring back by 940,000 barrels a day in 2010, while the Paris-based IEA forecasts a 1.4 million barrel-a-day demand rebound.
In its June report, OPEC said the worst appeared to be over in the oil markets. Tuesday's update estimated world oil demand declined a "steep" 2.5 million barrels a day in the second quarter. OPEC still sees declines for the rest of the year, but now predicts declines of 980,000 barrels a day in the third quarter and 140,000 barrels a day in the fourth quarter. That's smaller than earlier forecast declines of 1.22 million barrels a day and 370,000 barrels a day in the third and fourth quarters, respectively.
According to the report, emerging economies will make up the bulk of the demand increase next year, adding 800,000 barrels a day. China's demand is projected to increase by 300,000 barrels a day, up from minimal growth this year.
U.S. consumption is expected to rebound somewhat, rising by a daily 200,000 barrels after a sharp decline of 700,000 barrels a day this year, though OPEC warned it will be a "wild card in 2010 given the uncertainty about the pace of the economic recovery."
Overall, demand among the developed economies of the Organization for Economic Cooperation and Development, or OECD, is forecast to contract by 300,000 barrels a day in 2010 after an anticipated decline of 1.8 million barrels a day this year.
"The pace of the global economic recovery continues to be the main risk for the outlook for next year," OPEC said.
Non-OPEC supply is forecast to increase by 300,000 barrels a day in 2010 to 50.9 million barrels a day, driven by Brazil, the U.S., Azerbaijan, Kazakhstan, Canada, China and India. Mexico, the U.K., Norway and Russia are expected to experience the largest declines, according to the report.
OPEC said it expects demand for its crude in 2009 to fall at a daily rate of 2.3 million barrels a day to 28.5 million barrels a day versus last year's levels. OPEC members' crude demand is seen dropping by 400,000 barrels a day to 28.1 million in 2010 from this year.
OPEC's reference basket fell to $59.66 per barrel on July 13 after surging by almost 20% to average $68.36 a barrel in June.
Also in June, OPEC's crude production averaged 28.4 million barrels a day, up 39,000 barrels a day from the previous month, 1.18 million barrels a day above the group's output quota of 24.845 million barrels a day.