Opec cuts 2008 global demand growth on US recession threat

Opec lowered its estimate of first-quarter demand growth this year by 130,000 barrels a day to 87.19 million barrels a day. The overall 2008 estimate was cut 80,000 barrels a day to 86.99 million barrels, the Vienna-based organisation said in a report published yesterday. That cuts projected demand growth this year to 1.4 per cent from 1.5 per cent in last month's report.

"Risks to the world economy have increased considerably in January on mounting evidence of a slowdown in the U.S. economy, fuelling fears of an outright recession," the report said.

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The cuts follow a report by the International Energy Agency on February 13 that lowered its estimate of global demand for 2008 by 200,000 barrels a day to 87.6 million as a credit crisis spreads through the U.S. economy, threatening recession in the world's largest energy user.

Opec holds its next meeting in Vienna on March 5 and may cut production because of the slowdown, Opec President Chakib Khelil said on February 13. Demand for crude may drop by 1.8 million barrels a day in the second quarter due to a U.S. slowdown and the end of the heating season in many developed economies, the Opec president said this week.

U.S. gasoline demand fell 3.1 per cent for the week ended February 1 compared with the same week last year to average 8.86 million barrels, MasterCard Inc. said in a weekly usage report. "Although Opec's demand growth projections are lower than other assessments, one cannot rule out further downward revisions in the months ahead," the report said.Concern over depleted stockpiles of oil products and crude during the northern hemisphere's winter helped push the price of crude past $100 in New York for the first time in January. Growth in developing economies will continue to be strong this year with expectations of economic growth in China and India unchanged from last month's report, Opec said.