World oil demand was weaker than expected in the first half of 2006 because increasingly efficient use of oil is limiting consumption despite economic growth,
OPEC has said in a monthly report.
“World oil demand growth in 2006 has been revised down by 0.1 million barrels per day (bpd) since the last MOMR (OPEC monthly report) to stand at 1.2 million barrels pr day,” The Organization of Petroleum Exporting Countries said in its September report on world oil markets.
“Recent data shows weaker-than-expected demand in the first half of the year,” OPEC said Friday.
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Gasoline demand in the United States “grew by only 0.7 percent, well below the annual average of 1.6 percent despite the stabilization of gasoline prices.
“This has led to downward revisions of 0.2 million bpd and 0.1 million bpd to second- and third-quarter oil demand figures for North America,” the report said.
“Developing Countries, which account for 92 percent of world oil demand growth, are expected to see incremental demand of 0.6 million bpd for the year,” OPEC said.
Meanwhile, “Chinas accelerating economy continues to exceed expectations and oil demand growth could reach 8.3 percent by year-end,” the report said.
Predictions of the growth in world oil demand are “unchanged at 1.3 million bpd or 1.5 percent”, OPEC said, adding that as in 2006, “the lions share of oil demand growth in 2007 will come from developing countries”.
The report said that although the world economy continued to grow strongly in 2006 this “has not been matched with commensurate growth in oil demand”.
This, said OPEC, is because “oil intensity, which is the amount of oil used to produce a unit of output, has declined substantially in many countries”, particularly in Europe and the United States.
“The USA requires a quarter less oil to produce a unit of output compared to the early 1970’s” and the efficiency in using oil is even higher in major European countries, OPEC said.
“In the long run, strong price rises may intensify the downward trend in intensities, which may be occurring due to structural changes in the economy and saturation effects, by accelerating oil saving and substitution effects,” OPEC said.
On the supply side, it said: “Non-OPEC oil supply in 2006 is expected to average 51.1 million bpd, representing an increase of 1.1 million bpd over the previous year.
“In August, OPEC production stood at 29.8 million bpd, an increase of 0.1 million bpd from the revised previous month.”
OPEC oil ministers had decided Monday in Vienna to maintain their oil output ceiling at a near 25-year high, but attention quickly switched to when the cartel might cut production to stem falling prices.
The cartel has been pumping at near full capacity in a bid to cool the overheated oil market.
World oil prices rose slightly on Friday, at the end of a week in which they have tumbled to the lowest levels for almost six months as concerns eased about possible supply disruptions.
New York’s main contract, light sweet crude for delivery in October, climbed 11 cents to 63.33 dollars per barrel in electronic deals before the official opening of the US market.
In London, Brent North Sea crude for November delivery gained 15 cents to 63.69 dollars per barrel in electronic trading.
High oil prices are still being propped up by a shortage of refinery capacity and there is little sign of the bottleneck easing until 2010, industry executives and officials discussing OPEC’s future have warned.