JEDDAH – World oil demand has overcome earlier expectations of a declining momentum and moved to a more stabilized trend, supported by the summer driving season, the summer heat, and the continued shutdown of most of Japan's nuclear capacity. As a result, the forecast for global oil demand growth in 2012 remains unchanged at 0.9 mb/d, the Organization of Petroleum Exporting Countries (OPEC) said Wednesday in its “Monthly Oil Market Report” for the month of August 2012. There is considerable uncertainty surrounding the forecast for world oil demand growth in 2013, which remains unchanged at 0.8 mb/d. Nonetheless, risks are currently seen to be skewed to the downside. Demand for OPEC crude for this year has been revised slightly down from the previous assessment, but remain at 29.9 mb/d, representing a decline of 0.1 mb/d compared to the 2011 level. Demand for OPEC crude in 2013 is forecast to average 29.5 mb/d, a drop of 0.4 mb/d from the current year and representing a downward adjustment of 0.1 mb/d from the previous report. OPEC said its production rose by about 260,000 barrels per day (bpd) in August, despite a European Union embargo on Iran's exports, due to higher output from other members of the 12-member group. OPEC's report comes as the United States and other consumer nations are worried about high oil prices, which have risen to $115 a barrel for Brent crude. The OPEC Reference Basket in July rebounded from a three-month long declining streak to settle near $100/b, almost 6 percent above the previous monthly level. All basket component values improved by around $6. Year-to-date, the basket averaged $110.28/b. Crude oil futures prices recovered from the low levels reached in June, although most of the fundamental reasons behind the fall remain in play as the greater uncertainty economic outlook persists and global crude inventories are somewhat high. ICE Brent front-month prices increased by over 7 percent to settle at $102.72/b, while the WTI front-month improved by $5.53 to average $87.93/b. So far this month, the OPEC Reference Basket has continued to rise, standing at $108.36/b on Aug. 8. OPEC said it saw enough crude oil in the market. “OECD crude oil stocks remain at comfortable levels, especially in the US market,” OPEC said in the report. “As a result, any product shortage could be readily met by higher utilization of idle refinery capacity in a market with abundant crude supplies.” Non-OPEC supply is expected to increase by 0.7 mb/d in 2012, following an upward adjustment to the absolute level, mainly due to historical revisions, as well as an improved outlook and higher than- expected output from the US, Australia, the Sudans, and Yemen. In 2013, non-OPEC oil supply is forecast to grow by 0.9 mb/d, unchanged from the previous report, supported by projected increases in the US, Canada, Brazil, Kazakhstan, and the Sudans. OPEC NGLs and nonconventional oils are projected to increase by 0.4 mb/d in 2012 and 0.2 mb/d in 2013, unchanged from the previous assessment. In July, total OPEC crude oil output averaged 31.19 mb/d, according to secondary sources, representing a drop of 0.16 mb/d from the previous month. The report further said that the positive performance in light and middle distillates allowed product markets to continue strengthening in the Atlantic Basin. Despite weaker fuel oil demand and increasing crude prices cracks remained on the healthy side. In Asia, refinery margins exhibited a sharp recovery on the back of rising demand in naphtha and gasoline amid tighter sentiment due to refinery shutdowns and heavy maintenance in the region. The tanker market was very quiet in July with spot freight rates for dirty carriers declining on all classes. This decrease was driven by high tonnage availability and lower tonnage demand. Clean tanker spot freight rates fell west of Suez, but increased east of Suez, amid healthier activity. In July, OPEC spot fixtures rose by 1.3 percent, while OPEC sailings stayed almost stable to average 23.93 mb/d. Arrivals in North America and West Asia increased, while arrivals in Europe and the Far East fell. New York oil plunged under $89 per barrel Wednesday, nearing a two-month low on demand concerns arising from the eurozone debt crisis which is still plaguing Greece and Spain, dealers said. The market also dived as fresh data sparked fresh concern over the health of the United States economy, which is the world's biggest crude consumer. New York's main contract, light sweet crude for November, dived to $88.95 per barrel – the lowest point since August 3. It later stood at $89.40, down $1.97 from Tuesday's closing level. Brent North Sea crude for delivery in November retreated $1.65 to $108.80 a barrel in late afternoon trade in London. – SG/QJM
