Demand for OPEC oil may drop in 2010

02 March 2010

Abu Dhabi: With stockpiles at a higher level than the five-year average and a weak global economy, demand for OPEC crude may dip by as much as 100,000 barrels a day this year according to Mohamed Al-Hamli, oil minister for the United Arab Emirates.

Demand for OPEC crude could fall by as much as 2.3 million barrels a day, to 28.7 million barrels a day, al-Hamli said in a speech in Abu Dhabi today.

''Oil price stability has been achieved despite weakness in the global economy and unfavourable market fundamentals,'' he said. According to al-Hamli, prices were fluctuating between $70 and $80 a barrel, ''a level that is acceptable to producers, which at the same time does not dampen prospects for economic recovery.''

Al- Hamli's comments come ahead of an OPEC meet due to start in Vienna on 17 March. Members will meet to decide if production quotas need to be adjusted for the first time since they agreed to a record production cut in December 2008 in the face of the worst global recession since World War II.

Oil once again slipped below the $80 marker as analysts forecast an increase in US crude supplies for a fifth straight week, signalling a slowing of demand from the world's biggest energy consumer.

Al-Hamli said stocks in developed nations were around 93 million barrels above the five-year average, or almost 60 days of forward cover.

''The market is well-supplied,'' the minister said. ''There is plenty of oil in the market.''

Market analysts say the oil market is oversupplied because of the recession.

Demand for OPEC oil this year will remain almost at the same level as last year, the group said in a report last month.

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