A rebounding global economy spurred on mainly by China and other developing nations is expected to boost world oil demand by slightly under 1 percent next year, OPEC said Tuesday while cautioning that the pace of recovery remains far from certain. In its October Monthly Oil Market Report, the 12-nation group that supplies over 35 percent of the world's crude said demand was expected to grow by a daily 700,000 barrels to average 84.9 million barrels per day. That represents a 200,000 barrel per day upward revision from the Organization of the Petroleum Exporting Countries' September report. “Given the recent improvement in the economic performance of OECD and China, oil demand is expected to be better than earlier forecast,” OPEC said, referring to the Organization for Economic Cooperation and Development, a rich nations club. It added, however, that the economic recovery in 2010 will be “slow and weak.” “The bulk of the growth in next year's oil demand will take place in non-OECD, mainly China, the Middle East, India and Latin America.” The report offers the latest hint of a silver lining in a market that spent much of the second half of last year on a steep downhill from crude's record peak of over the $147 per barrel reached in July 2008. The projections echo a report last week by the International Energy Agency, the Paris-based adviser to oil-consuming countries, which said global crude demand would reach 86.1 million barrels a day in 2010, up 1.7 percent from this year. The growth is welcome news for OPEC, whose member states have seen their revenues take a pounding as the price of crude - their chief export - fell in tandem with the deepening of the world's worst recession in over six decades. Buoyed by a series of output cuts OPEC implemented through December and aimed at cutting its output by 4.2 million barrels per day from September 2008 levels, crude has climbed steadily since the start of this year. Oil has hovered around the $70 per barrel mark for months, even as the producer bloc has refrained from instituting new production cuts during its last two meetings. The focus, instead, has been on enforcing quota compliance and avoiding jarring the market and, by extension, the global economic recovery. But OPEC has also been grappling with overproduction by some of its members, as well as rising production from non-OPEC member Russia, which is expected to average output of roughly 9.89 million barrels per day in 2009. The report cited Nigeria and Angola as two of the main OPEC members behind the 43,000 barrel per day increase in the bloc's oil production in September - the same month the group decided to again hold quotas steady and focus more on compliance. Demand for OPEC crude next year is projected to average 28.4 million barrels per day, an upward revision of 300,000 barrels per day from the September forecast. That level, however, is still about 200,000 barrels a day lower than 2009 demand. The drop is linked to continuing declining demand in the first half of 2010, the report said. OPEC revised up its forecast for world oil demand this year by 200,000 barrels per day, to show a decline of 1.4 million barrels per day. “The risks to the forecast are seen on the upside,” it said. “Should the US continue to show healthier oil demand levels, then world oil demand could increase by another 200,000 barrels per day before year's end.” Non-OPEC oil supply to increase by 410,000 barrels per day this year - an upward revision from earlier estimates based on growing supply from the US, Russia and the Caspian region. In 2010, non-OPEC supply is seen growing by 350,000 barrels per day, reflecting a minor 13,000 barrel per day downward revision from the previous month's forecast, the report said. Price jumps to $74 Oil prices rose Tuesday on prospects of improved demand amid an economic recovery and as cold weather hit the United States earlier than expected. New York's main contract, light sweet crude for delivery in November climbed 88 cents to $74.15 a barrel, a day after jumping a hefty two percent. London's Brent North Sea crude for November delivery gained $1.04 to $72.40 a barrel. The price rally stems from continued momentum and improved outlook for demand next year, said an analyst. He saw the current market “really ignoring the current supply fundamentals.”
