Nov. 18 (Bloomberg) -- The Organization of Petroleum Exporting Countries, producer of more than a third of the world's oil, cut its estimate for the growth in world demand this year and next as high prices hurt economic growth.
World consumption will rise by 2.5 million barrels a day, or 3.2 percent, this year to 81.74 million barrels a day, OPEC said in a monthly report, lowering the annual increase by 120,000 barrels a day from its previous forecasts. Next year, demand will grow by 1.49 million barrels a day, or 1.8 percent, compared with the 1.61 million-barrel, 2 percent gain it projected a month ago.
The 2004 demand reduction was ``to account for the slowdown in Chinese consumption in the second half of the year as well as expected lower apparent demand in the former Soviet Union due to the slower pace of economic activity,'' said the report from OPEC's Vienna headquarters.
Crude oil prices rallied earlier this year as surging world demand, led by China and the U.S., eroded OPEC's spare production capacity, leaving supply vulnerable to disruptions. Brent crude, traded in London, has dropped 17 percent since reaching a record $51.95 on Oct. 27.
The OPEC report said most forecasters now expect oil prices of $42 to $43 a barrel for 2005, up from a September consensus of $37 to $38, and that ``this 10 percent increase in the consensus oil price assumption has reduced the forecast of world gross domestic product by 0.1 percent to 4 percent.''
Demand for OPEC Oil
Reduced world demand also means less need for OPEC's oil. The demand for OPEC oil, known as the call on OPEC, will be 28.31 million barrels a day this quarter, 200,000 less than expected last month, the report by OPEC economists said.
The group's 11 members, which include Saudi Arabia, Iran and Iraq, are pumping at record rates, equal to 30.23 million barrels a day in October, according to secondary surveys, which was 78,000 barrels a day more than the revised estimate for September, it said.