The Organization of Petroleum Exporting Countries said Tuesday world oil demand growth is expected to continue falling this year as unemployment escalates in OECD countries and consumer sentiment remains constrained but demand could turn positive in 2010 reaching 84.3 million barrels per day.
In its July report, OPEC said that "after two consecutive years of negative growth, global demand next year is projected to show a moderate increase of 500,000 barrels a day."
The statement comes after OPEC said in its June monthly report that the worst may be over for oil markets and slightly upgraded its third-quarter demand forecast.
According to the report, non-OECD countries are seen making up the bulk of the demand increase in the second half of next year at 800,000 barrels a day, with China's demand projected to increase by 300,000 barrels a day, up from minor growth this year. U.S. consumption is expected to rebound somewhat in 2010, rising by a daily 200,000 barrels after a sharp decline of 700,000 barrels a day this year.
At the same time, Organization for Economic Cooperation and Development, or OECD, countries are forecast to see a continued contraction of 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, adding that for the current year its world oil demand growth forecast remains unchanged at -1.6 million barrels a day.
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.
However, OPEC said current uncertainties in the oil markets will continue to cast a shadow over the market in 2010.
The report comes as oil prices have dropped under $60 a barrel for the first time since January and the Paris-based International Energy Agency report last week forecasting demand will fall 2.9%, or 2.5 million barrels a day in 2009 versus last year.
According to the IEA, oil consumption will rebound by 1.7% next year to 85.2 million barrels per day but it will stay negative this year.
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 compared with a year ago.
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.