2010 Demand For OPEC Crude Seen +0.1 Million B/D At 28.9 Million B/D

The Organization of the Petroleum Exporting Countries, or OPEC, said Friday demand for OPEC crude in 2010 is estimated to have risen to 28.9 million barrels a day, and it sees this same demand hitting 29.2 million barrels a day in 2011 as the world economic recovery and demand for crude strengthens.

"The world economy experienced a significant recovery in 2010. Growth is now estimated at 4.3%, representing an upward revision from the initial forecast of 2.4%," OPEC said in its monthly report published December.

"This has been an impressive reversal from the recession of 2009, although still below the 5-year average prior to the recession," it added.

Most economies grew at high levels in the first half of 2010 and the expansion continued into the second half thanks to continued government-led stimulus in the OECD, although this now is winding down. Furthermore, China, India and Brazil are trying to dampen their strong expansion to avoid overheating. These two slowing effects are expected to produce lower growth of 3.8% in 2011.

OPEC said the majority of the growth in 2011 will come from Asia, mainly China, which is expected to contribute a third of next year's growth - about the same level as in 2010.

However, this 2011 growth may be hindered by some critical issues including the still muted private consumption, persistently high unemployment, the euro- zone sovereign debt situation, fragile U.S. housing market, and China's efforts to manage its growth to avoid overheating.

Global oil demand and non-OPEC supply were also revised up significantly in 2010 with world oil demand growth revised up from the initial forecast of 0.5 million barrels a day to 1.5 million barrels a day, thanks to stronger-than- anticipated recovery in the global economy.

"Developing countries remain the contributor with more than 75% in total oil demand growth led by China, India, the Middle East and Latin America. At the same time OECD consumption has turned positive after four consecutive years of negative growth driven by an improvement in U.S. demand and to a lesser extent, consumption in the OECD Pacific," OPEC said.

Non-OPEC supply growth for 2010 was revised up to 1.1 million barrels a day, up from initial growth of 0.3 million barrels a day, due to growth in non- conventional oil and the strong performance of Russia. In contrast OPEC NGLs experienced a downward revision from 5.3 million barrels a day to 4.8 million barrels a day as a result of project delays, to represent a growth of 0.4 million barrels a day.

"As a result of these adjustments, the demand for OPEC crude in 2010 has been revised up by 0.8 million barrels a day to 28.9 million barrels a day, a figure which is still below the previous year's level," OPEC said.

For 2011, current projections for world oil demand growth stand at 1.2 million barrels a day, and demand from 2010 and 2011 are expected to offset the cumulative contraction of 1.9 million barrels a day in oil demand in 2008 and 2009.

Non-OPEC supply for 2011 has been revised up slightly to 0.4 million barrels a day while growth in OPEC NGLs has been adjusted lower by 0.1 million barrels a day to 0.5 million barrels a day.

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