OPEC cuts oil demand growth forecast on economy

OPEC cut its forecast for global oil demand growth this year as a worsening economic outlook curbs consumption in developed economies.

The Organization of the Petroleum Exporting Countries, in a monthly report on Tuesday, also said the group's own production has surged to more than 30 million barrels per day, an increase that comes just as the economic outlook is weakening.

"Dark clouds over the economy are already impacting the market's direction," OPEC said in the report. "The potential for a consequent deterioration in market stability requires higher vigilance and close monitoring of developments over the coming months."

World oil demand will increase by 1.21 million barrels per day (bpd) in 2011, OPEC said in the report, 150,000 bpd less than expected last month. Growth next year was lowered only marginally, by 20,000 bpd to 1.30 million bpd.

Brent crude slumped to the lowest in six months on Tuesday, dipping below the USD 100-mark briefly after a US credit downgrade intensified concern about a global slowdown in demand for energy.

"Economic worries along with high oil prices have affected OECD oil demand," OPEC said. A revised report received minutes before its embargoed release time of 1130 GMT removed the words "high oil prices" from the sentence.

"Oil demand in the OECD is expected to continue its contraction after a temporary rebound last year."

OPEC, which pumps more than a third of the world's oil, is the first of the three most closely watched oil forecasters to update its supply and demand estimates this month.

The 2011 demand growth forecast from OPEC is already lower than that of the US government's Energy Information Administration, which predicts a rise of 1.43 million bpd. The EIA releases its August report later on Tuesday.

OPEC's latest 2011 demand growth forecast is similar to that of the International Energy Agency, adviser to the United States and 27 other industrialised countries, which issues its next report on Wednesday.