The Organization of Petroleum Exporting Countries (OPEC), supplier of more than 40 percent of the world's oil, said demand for its crude will fall 4.2 percent this year as the deepening recession reduces spending on fuels. Consumption of OPEC's crude will shrink 1.4 million barrels a day to 29.5 million barrels a day, according to a monthly report from the producer group on Thursday. That level of demand is 720,000 barrels less than it predicted last month. OPEC also shaved its world oil demand estimate for 2009 to 85.66 million barrels a day. OPEC lowered its estimate for 2009 worldwide oil demand this year by 20,000 barrels a day to 85.66 million barrels a day. That means demand will contract by 180,000 barrels a day, or 0.2 percent, similar to the percentage in last month's report. OPEC agreed to a record 9 percent reduction in supply targets at its last meeting in December to try to halt the plunging price of oil, which has dropped more than $100 a barrel in New York in the past six months. This week Saudi Arabia said it will curb output by more than was announced at the Dec. 17 summit in Oran, Algeria. “Since the meeting in Oran, negative news on the world economy has only continued, despite the acceleration of governmental efforts to stimulate the economy,” OPEC's Vienna- based secretariat said on Thursday. Oil prices fell more than 5 percent on Thursday as thickening economic gloom added to worries world energy demand will keep shrinking this year. US crude fell $1.88 to settle at $35.40 a barrel, after falling as low as $33.20 - the lowest since Dec. 19. London Brent fell 39 cents to $44.69 a barrel, maintaining an unusual premium to the US benchmark. There will be a “major contraction” in demand among members of the Organization for Economic Cooperation and Development, with the United States being the “main contributor” to this reduction, the report said. The International Energy Agency, an adviser to 28 nations, will publish its own monthly oil market report today (Friday). The IEA is the last major forecasting agency to maintain a forecast of rising demand for 2009, with a prediction in its Dec. 11 report for a gain of 400,000 barrels a day. The IEA uses economic projections from the International Monetary Fund. Speaking in Madrid on Thursday, IEA chief economist Fatih Birol said IEA demand estimates will “reflect world economic figures.” Last year, world oil demand declined for the first time since 1983, according to the IEA. OPEC cut its forecast for oil supply from outside the group to 51.15 million barrels a day, “primarily due to lower expectation for Russia, Azerbaijan, Brazil, Mexico, and Oman.” That still leaves an increase of 580,000 barrels a day, or 1.1 percent, this year over 2008. Indonesia, which formally left OPEC on Jan. 1, is now categorized in the monthly report's supply and demand tables as a non-OPEC producer. Crude production from all 13 OPEC members in December, including Indonesia, averaged 30.282 million barrels a day, a decline of 833,700 barrels a day from November, the report said, citing secondary-source estimates that include analysts and news agencies. For the 11 members in OPEC's quota system, which excludes Indonesia and Iraq, December production was 27.111 million barrels a day. That's 2.266 million barrels a day more than the new collective target for those countries of 24.845 million barrels a day, which took effect on Jan. 1. Saudi Oil Minister Ali Al-Naimi said Tuesday the Kingdom is currently producing 8 million barrels a day, about level with its quota effective this month, and plans to reduce production further in February.
