OPEC sees flat demand for members' crude in '08

By OGJ editors
HOUSTON, July 16 -- The Organization of Petroleum Exporting Countries expects demand for its members' crude oil to change little next year as limits on global refining capacity continue to support oil prices.

In its July Monthly Oil Market Report, OPEC projects a rise in global oil demand next year of 1.34 million b/d following an expected 1.25 million b/d increase this year. Its projection for average annual oil demand next year is 86.94 million b/d.

Most of the demand growth will occur in Asian countries other than those that belong to the Organization for Economic Cooperation and Development and the Middle East.

Among members of the OECD, representing most of the industrialized countries, demand growth will be confined to a 300,000 b/d gain in the US.

OPEC's demand forecast for 2008 assumes growth in global gross domestic product of 4.9%, fractionally below the increase expected this year.

Depending on variables such as economic growth, weather, and response to elevated product prices, the global oil demand increase next year could be as high as 1.45 million b/d or as low as 1.2 million b/d, OPEC says.

The exporters' group sees an increase in non-OPEC oil supply next year of 1.01 million b/d to an average of 51.42 million b/d.

The biggest regional non-OPEC supply change will be an increase of 460,000 b/d from the Former Soviet Union to an average of 13.08 million b/d. FSU increases by major country are Russia, 180,000 b/d to 10.07 million b/d; Azerbaijan, 180,000 b/d to 1.09 million b/d; and Kazakhstan, 100,000 b/d to 1.48 million b/d.

OPEC expects nonmember oil supply gains next year of 290,000 b/d to 4.82 million b/d in Latin America, 220,000 b/d to 14.59 million b/d in North America, 120,000 b/d to 740,000 b/d in OECD Pacific, 90,000 b/d to 2.812 million b/d in non-OECD Asia, and 60,000 b/d to 2.86 million b/d in Africa.

The group predicts that output of NGLs and nonconventional oil by its members will rise 410,000 b/d to 4.8 million b/d next year and expects demand for its members' crude to average 30.7 million b/d, about this year's level.

OPEC expects global refining capacity to increase by less than demand in 2008—1 million b/d with most of the new capacity coming on stream late in the year.

"Overall, the outlook for the oil market in 2008 is shaping up to be quite similar to the current year, with continued tightness in the downstream supporting high product prices and frequent refinery outages exerting further upward pressure, despite the healthy crude oil market," OPEC said.

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