LONDON - World oil demand is contracting faster than expected, increasing pressure on prices, OPEC said on Friday ahead of a key meeting of the group this weekend.
The Organization of the Petroleum Exporting Countries said in its Monthly Oil Market Report that demand would drop by 1.01 million barrels per day (bpd) in 2009 to average 84.61 million bpd. Its previous forecast was for demand to fall 580,000 bpd.
World oil demand is falling for the first time in a generation as the deep global downturn closes factories and brings unemployment to the world's largest economies.
Oil prices have fallen by around $100 a barrel from a peak of almost $150 last July, forcing OPEC producers to cut oil output in an attempt to balance the market.
OPEC has promised to cut production by 4.2 million bpd, equal to about 5 percent of daily world demand, from its output levels in September.
The report said OPEC's action so far had managed to help halt the steep downward slide in oil prices and keep them close to $40 a barrel.
OPEC, which pumps more than a third of the world's oil, meets in Vienna on March 15 and must decide whether to cut production further.
The report said pressure on the oil market would continue.
"With continued economic deterioration and demand erosion as well as the impending low demand season, there is likelihood of renewed pressure on prices," the report said.
COMPLIANCE
It said oil prices needed to stay at levels that "support energy investment across the supply chain to help sustain longer-term economic growth."
"These are the main issues under consideration when the OPEC conference meets on March 15," it said.
Oil prices rose on Friday. U.S. crude futures were up 49 cents at $47.52 at 1252 GMT (8:52 a.m. EDT).
The report said demand for OPEC's oil would fall by 1.8 million bpd in 2009, a slightly steeper drop than its previous forecast of a year-on-year fall of 1.7 million bpd.
The report showed OPEC still had more to do delivering on existing output curbs.
In February, the 11 members with supply targets, all excluding Iraq, cut output by 649,000 bpd to 25.72 million bpd, according to data from secondary sources cited by OPEC in the report.
Production remains above OPEC's 24.84 million bpd implied target and the cutback indicates OPEC met just over 79 percent of its pledge to lower output, according to a Reuters calculation based on the OPEC data.
A Reuters survey earlier this month put compliance with the supply curbs at 81 percent in February.
The International Energy Agency (IEA), which advises 28 industrialized nations on energy policy, said on Friday strict adherence to OPEC supply cuts that have already been agreed would shrink oil stocks in developed nations even if demand contracted further.
Estimating OPEC compliance with agreed cuts at 80 percent, the IEA's monthly report implied OPEC did not need to cut output targets further when it meets on Sunday.
"Our view is that OPEC's current targets, if they comply with them fully, will begin to tighten the market quite sharply from late in the second quarter," said David Fyfe, head of the oil industry and markets division at the IEA.
The Organization of the Petroleum Exporting Countries said in its Monthly Oil Market Report that demand would drop by 1.01 million barrels per day (bpd) in 2009 to average 84.61 million bpd. Its previous forecast was for demand to fall 580,000 bpd.
World oil demand is falling for the first time in a generation as the deep global downturn closes factories and brings unemployment to the world's largest economies.
Oil prices have fallen by around $100 a barrel from a peak of almost $150 last July, forcing OPEC producers to cut oil output in an attempt to balance the market.
OPEC has promised to cut production by 4.2 million bpd, equal to about 5 percent of daily world demand, from its output levels in September.
The report said OPEC's action so far had managed to help halt the steep downward slide in oil prices and keep them close to $40 a barrel.
OPEC, which pumps more than a third of the world's oil, meets in Vienna on March 15 and must decide whether to cut production further.
The report said pressure on the oil market would continue.
"With continued economic deterioration and demand erosion as well as the impending low demand season, there is likelihood of renewed pressure on prices," the report said.
COMPLIANCE
It said oil prices needed to stay at levels that "support energy investment across the supply chain to help sustain longer-term economic growth."
"These are the main issues under consideration when the OPEC conference meets on March 15," it said.
Oil prices rose on Friday. U.S. crude futures were up 49 cents at $47.52 at 1252 GMT (8:52 a.m. EDT).
The report said demand for OPEC's oil would fall by 1.8 million bpd in 2009, a slightly steeper drop than its previous forecast of a year-on-year fall of 1.7 million bpd.
The report showed OPEC still had more to do delivering on existing output curbs.
In February, the 11 members with supply targets, all excluding Iraq, cut output by 649,000 bpd to 25.72 million bpd, according to data from secondary sources cited by OPEC in the report.
Production remains above OPEC's 24.84 million bpd implied target and the cutback indicates OPEC met just over 79 percent of its pledge to lower output, according to a Reuters calculation based on the OPEC data.
A Reuters survey earlier this month put compliance with the supply curbs at 81 percent in February.
The International Energy Agency (IEA), which advises 28 industrialized nations on energy policy, said on Friday strict adherence to OPEC supply cuts that have already been agreed would shrink oil stocks in developed nations even if demand contracted further.
Estimating OPEC compliance with agreed cuts at 80 percent, the IEA's monthly report implied OPEC did not need to cut output targets further when it meets on Sunday.
"Our view is that OPEC's current targets, if they comply with them fully, will begin to tighten the market quite sharply from late in the second quarter," said David Fyfe, head of the oil industry and markets division at the IEA.
