Opec Sees 'devastating Contraction' In Oil Demand

[Spezzatura]

OPEC again revised down its estimate for world crude demand on Wednesday, saying a "devasting contraction" in consumption would keep prices under pressure in the months ahead.

"In the coming months, the market is expected to remain under pressure from uncertainties in the economic outlook, demand deterioration and the substantial overhang in supply," the Organization of Petroleum Exporting Countries wrote in its latest monthly report.

It said "vigilant monitoring is essential" ahead of the cartel's next meeting at the end of May at which some members are expected to push for further output cuts to help support prices.

"Oil demand is suffering more and more from the world economic recession," it said, saying this had resulted in another downward revision in its forecast for demand this year of 0.4 million barrels per day (bpd).

OPEC estimated that demand would contract by 1.37 million bpd or 1.6 percent in 2009.

In its previous monthly bulletin released in March, OPEC had been pencilling in a contraction of 1.01 million bpd for 2009.

"World oil demand is already out of its high demand seasonality achieving nothing but devastating contraction," OPEC said.

Earlier this week, Iran's OPEC minister, Mohammad Ali Khatibi, had suggested the cartel could cut oil production again if global demand for crude continues to fall in the near future.

"If demand continues to fall until the next meeting of OPEC, a further output cut is possible," Khatibi was quoted as saying by Iranian daily Hamshahri.

OPEC's next meeting is in Vienna on May 28.

OPEC has reduced its oil production target by an overall 4.2 million barrels per day since September to 24.84 million bpd, the lowest level since just after the US-led invasion of Iraq in 2003.

On Sunday, Iran's Oil Minister Gholam Hossein Nozari said the reductions adopted by OPEC up to now have helped stop prices from falling further in the past few months.

Iran, OPEC's second largest crude producer, favours a global oil price of between 75 and 80 dollars a barrel.

Oil prices hit a peak above 147 dollars in July last year but have fluctuated this year between 40 and 55 dollars.

OPEC has said it sees 75 dollars as the price at which investment in exploration and production becomes profitable.

On Wednesday, world oil prices were up as traders eyed a fresh supply disruption in crude producer Nigeria ahead of the weekly energy stocks report in key consumer the United States.

London's Brent North Sea crude for May delivery added 60 cents to 52.56 dollars per barrel.

New York's main futures contract, light sweet crude for delivery in May, rose 68 cents to 50.09 dollars a barrel.

A fire at a key Shell pipeline in volatile southern Nigeria has led to a production loss of 180,000 barrels a day involving a range of companies, an industry source said Wednesday.

The loss includes 130,000 barrels per day for Anglo-Dutch oil giant Shell, 30,000 barrels for French group Total and another 20,000 barrels from various other operators, the source told AFP on condition of anonymity.

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[Rupert]

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