World oil demand is projected to grow by 900,000 barrels per day in 2010, OPEC said Wednesday, revising up its previous month's forecast while cautioning that the increase is hinged on a sustained global economic rebound, particularly in the United States, AP reported.
The Organization of the Petroleum Exporting Countries, supplier of about 35 percent of the world's crude, raised its demand forecast to 85.24 million barrels per day, roughly 100,000 barrels per day higher than its February projections. It also said demand for OPEC crude was estimated at 29 million barrels a day - some 200,000 barrels per day more than its previous month's forecast - but noted that members were still overproducing.
Describing 2009 as "the worst year in the industry in oil demand since the oil crisis in the 1980s," the 12-member producer bloc said in its March report that global oil demand "has been highly dependent upon the world economy, supported by government-led stimulus plans."
"These stimulus plans have already done a great job of jump-starting many sectors of the economy, including energy," OPEC said, adding that "questions remain as to how long governments will be able to afford supporting their economies."
"Should this support diminish, then world oil demand would of course be impacted," it said, noting that a pullback from stimulus efforts in the United States, in particular, before a full recovery could have the domino effect of dampening demand growth in other regions, as well.
OPEC's projections offer a more conservative take on global demand growth than those of the U.S. Energy Department whose statistical arm, the Energy Information Administration, on Tuesday forecast demand would climb 1.5 million barrels per day - 300,000 barrels per day more than its February estimates.
Either way, the increases mark some good news for OPEC whose members rely on crude exports for as much as 90 percent of their government revenues.
The U.S. EIA said earlier that OPEC members stood to earn $767 billion from oil exports this year, an almost 34 percent gain from last year when oil prices took a hammering amid crumbling global demand.
OPEC is scheduled to meet March 17, but analysts and officials have said the group appears unlikely to change its members production quotas.
The bloc has not revised its production quotas since the end of 2008 when it enacted a series of cuts aimed at lowering its output by 4.2 million barrels per day. The cuts came as oil prices plummeted from a mid-2008 high of roughly $147 per barrel to the mid-$30s on the back of the global meltdown.
Since then, they have pushed to boost member compliance with production targets, that have been eroding as prices rebounded to the $80 per barrel range.
Kuwait's Assistant Undersecretary for Economic Affairs Nawal Al-Fuzai told the country's official KUNA news agency on Wednesday that OPEC member compliance with quotas had slipped to 55 percent. When OPEC last met in December, compliance was around 60 percent.
The group said in its report that OPEC production climbed to 29.36 million barrels per day last month, an increase of 192,000 barrels a day over January levels with the biggest gains coming from Angola, Venezuela and Iraq - which is not bound by the quotas. Factoring out Iraq, OPEC production was 26.8 million barrels per day, or about 1.8 million higher than the group's target production level.
It forecast demand for OPEC crude to be 29 million barrels per day, or 200,000 barrels a day higher than February forecasts.
That OPEC is already producing well above what its 2010 forecast demand underscores the challenges it faces.
While reducing its production is key to helping drain excess oil supply from the market, such a step could push world oil prices higher, thereby undercutting global economic recovery efforts.
In the United States, one of the world's largest consumer of crude, oil inventories climbed last week by 6.5 million barrels, according to figures released Wednesday by the American Petroleum Institute. The U.S. EIA is scheduled to release its inventory figures later in the day.