The Organization of Petroleum Exporting Countries (OPEC) said the worst of the impact from the economic crisis was past for the oil markets, as it fractionally reduced its demand estimate for 2009 on Friday. “In light of the considerable challenges the world economy and commodity markets, particularly the oil market, have undergone, the worst appears to be behind us,” OPEC wrote in its latest monthly report. “As the world economy stabilizes, the world oil demand appears to be settling down,” it said. “Industrial production activities are steadying and in some parts of the world have even improved slightly. This should stop the bleeding in oil demand. There are no significant downward revisions to our previous oil demand forecasts.” OPEC estimated that demand would contract by 1.62 million barrels per day (bpd) or 1.89 percent in 2009 - only a marginal downward revision in demand from its earlier forecast. In its previous monthly bulletin released in May, OPEC had been penciling in a contraction of 1.57 million bpd or 1.83 percent for 2009. Nevertheless, uncertainties remained, OPEC cautioned. “US oil demand is the wild card and any further downward adjustment in the country's oil demand would have an impact on total world oil demand,” it said. One of the major uncertainties was whether the current optimistic sentiment would prove sustainable, which will largely depend on improvements in the real economy and in financial markets, OPEC said. “Despite spreading optimism that the deep economic downturn may reach bottom in the coming quarters, the world economy is still facing considerable challenges.” Unemployment was still rising in industrialized countries, banks' balance sheets remained shaky and private consumption, investment and exports were expected to remain subdued. “These concerns could dampen or delay a global recovery. Moreover, markets are beginning to worry about the consequences of the huge public deficits.” If the current optimism prevailed, however, stability on the oil market would be achieved by producers continuing to reduce the excess supply and bringing inventories back to more healthy seasonal levels by the end of the year, OPEC said. “In line with these efforts, OPEC member countries have reiterated their firm commitment to agreed production levels, as well as their readiness to respond swiftly to any developments which might place oil market stability at risk,” the report said. At its meeting in Vienna last month, OPEC opted to keep its output unchanged at 24.845 million barrels a day. On Thursday, the International Energy Agency (IEA) raised its forecast for global oil demand this year and said that a recent 20-dollar surge in the oil price and unexpectedly strong US consumption were among signals that the recession may be receding. Oil prices succumbed to profit taking and a stronger dollar Friday at the end of a week of gains that saw prices peak above $73 a barrel. New York's main futures contract, light sweet crude for delivery in July, fell to $72.04 a barrel, a drop of 64 cents from Thursday's close. In London, Brent North Sea crude for July delivery shed 87 cents to settle at $70.92 a barrel. “The market probably went up a little bit too quickly and I suspect we see some profit taking,” said Bart Melek of BMO Capital Markets. The New York contract had spiked about $5 over the past three days, peaking at $73.23 in intraday trade Thursday, its highest level since last October. On May 1, the price hovered around $50 a barrel. Ellis Eckland, an independent analyst, noted that a firmer dollar makes dollar-priced oil more expensive for buyers using weaker currencies.
