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OPEC trims 2008 oil demand growth, sees ample supply

LONDON - OPEC on Friday trimmed its forecast for global oil demand growth in 2008 for a fifth month and said production was more than adequate, paving the way for a build in inventories.

The likelihood was that oil prices, which have slid from a July peak above $147 a barrel, would remain under pressure, said the 13-member group, citing easing political tension, a stronger U.S. dollar and higher OPEC output.

"Given these trends, risks to the outlook for the world oil market appear to be on the downside," the Organization of the Petroleum Exporting Countries said in its August Monthly Oil Market Report.

Oil prices fell further on Friday to below $113 a barrel for U.S. crude. CLc1

OPEC predicted oil demand would rise by 1.0 million barrels per day (bpd) this year, 30,000 bpd less than the previous forecast.

That reduction followed cuts in OPEC's July, June, May and February reports and adds to evidence slowing economies and high energy prices have eroded fuel use.

The group left its forecast for world consumption growth in 2009 unchanged, predicting a rise of 900,000 bpd. That would be the slowest annual expansion since 2002, the report said.

The International Energy Agency, an adviser to 27 industrialised countries, predicts mildly more demand than OPEC next year.

The IEA earlier this week raised its forecast for global demand growth in 2009 by 60,000 bpd to 930,000 bpd.

US-led decline in demand

The slowdown in consumption is concentrated in the United States, the world's biggest fuel burner, and other developed countries.

In the emerging economies, led by China and India, oil consumption is expected to remain robust.

Harry Tchilinguirian of BNP Paribas said the downward revisions were modest in the context of a pessimistic outlook for the world economy and overall consumption was still expected to grow.

"The U.S. is the most visible market. It has weekly data (on supply and demand). It's the largest market, but in terms of growth that's not where it's happening," he said.

"It's a lot more difficult to get a sense of what's happening in China, India or Latin America."

Any build up in oil inventories was from a low base, he added.

The producer group next meets in Vienna on Sept. 9 to reassess its output policy and its in-house economists will continue monitoring market developments between now and then.

Friday's report noted there was "potential for a sharp build in crude oil inventories.

But it also said risks of disruption remained, including from geopolitical tension, the hurricane season in the Gulf of Mexico and colder winter weather that would increase the demand for heating fuel.

OPEC, which pumps roughly two in every five barrels of oil, said demand for its crude was expected to average 32.05 million bpd in 2008, lower than the group's production in July of 32.64 million bpd.

It left its estimate for supply growth from non-member countries steady at 950,000 bpd next year.