World oil demand growth could fall short of forecasts in 2013 due to economic weakness and U.S. supply will hit its highest in three decades, OPEC said on Tuesday, curbing the need for oil from the 12-member producer group.
The Organization of the Petroleum Exporting Countries in a monthly report left its forecast for growth in global oil consumption unchanged for now, still expecting an expansion of 840,000 barrels per day (bpd) this year.
“However, there are a number of downward risks to this growth,” the report from OPEC’s Vienna headquarters said. “The euro’s instability could lead to even deeper recession in some Mediterranean countries.
“And the potential impact of a full budget cut in the United States could drag down the world economy, consequently reducing oil demand.”
OPEC, the source of more than a third of the world’s oil, expects the U.S. economy to expand by 1.7 per cent in 2013, down from the 1.8 per cent previously thought. Growth in the euro zone is now seen contracting by 0.2 per cent, having earlier been expected to expand slightly.
“While the U.S. economy continues recovering, it is mainly the sustained uncertainty about the budgetary negotiations in Congress that are holding back the momentum to continue at its full potential,” OPEC said.
“The euro zone seems to continue to be significantly entangled in its sovereign debt crisis.”
OPEC in the report also trimmed forecast demand for its own crude in 2013 by 70,000 bpd due to rising supply from outside the 12-member group.
The non-OPEC supply growth will again be driven by the United States, which is enjoying a shale energy boom. OPEC expects U.S. oil supply to rise by 580,000 bpd to 10.59 million bpd in 2013, which it said would be the highest since 1985.
OPEC’s own production rose by 74,000 bpd in February to 30.31 million bpd, according to secondary sources cited by the report, led by higher output in Iraq and Saudi Arabia.
The report from OPEC is the first of this month’s trio of major oil outlooks to emerge. The U.S. government’s Energy Information Administration is scheduled to publish its estimates later on Tuesday.
The International Energy Agency, adviser to 28 industrialised countries, issues its report on Wednesday.