LONDON: Global oil demand next year could bounce back to levels last seen in 2007 as recovery from the deepest recession in decades drives fuel use, but OPEC does not plan to add extra capacity as more non-OPEC supply curbs the need. The Organization of the Petroleum Exporting Countries also added its voice to the clamour for regulation in an annual report published on Thursday - the day after the US announced a new round of quantitative easing, raising the prospect of a deeper dollar decline and waves of cheap money flowing across asset classes. “While the worries surrounding excessive price volatility and the role of speculation have somewhat diminished over the past 12 months or so, it is essential we do not forget the price extremes that the market witnessed back in 2008,” OPEC wrote. Its World Oil Outlook said demand growth of 1 million barrels per day (bpd) in 2010 had been more than double that predicted in last year's outlook and would next year edge up by 1.1 million bpd, taking absolute consumption to 86.6 million bpd. For the medium term to 2014, it said world oil consumption would rise to 89.9 million bpd, an increase of 5.4 million bpd from 2009 and an upward revision from its forecast in last year's report of 89.1 million bpd. At the same time, OPEC assumed an oil price of $75-to-$85 a barrel to 2020 - below Thursday's session high of more than $86 - and said there was too much uncertainty to justify further expansions to OPEC output capacity. “Current investments should be enough to satisfy both demand for OPEC crude and provide a comfortable cushion of spare capacity, which already exceeds the very high level of 6 million bpd,” OPEC Secretary General Abdullah Al-Badri wrote in an introduction to the 281-page report. “Downside demand risks for OPEC oil are substantial, suggesting that rising levels of unused capacity are a real concern,” the report said. Non-OPEC supply would increase by 2.2 million bpd between 2009 and 2014, while demand for OPEC crude would reach only 30.6 million bpd by 2014 from 28.7 million bpd in 2009, less than last year's forecast. Sluggish recovery from global recession and weak demand has helped to hold international benchmark US crude in a $70-$80 range for much of the year. It broke above that level in the weeks ahead of Wednesday's announcement of further US quantitative easing and as the US dollar fell. A weaker dollar makes dollar-denominated commodities cheaper, but also reduces the value of petrodollars for resource holders. In that context, Saudi Arabian Oil Minister Ali Al-Naimi Monday said oil in a $70-to-$90 range was comfortable for consumers, marking a shift upwards from the $70-to-$80 the top exporter had previously said was ideal for producers and consumers. However, a senior Gulf source Thursday said $70-to-$80 was still a fair price. “The recent contraction in economic activity and the accompanying dramatic fall in global oil demand have highlighted the concerns surrounding the risks of over- or under-investing,” OPEC said. “The implications for OPEC investment needs are startling: the difference between the higher and lower growth scenarios over the next decade reaches $230 billion in real terms. This emphasizes the fact that concerns over security of demand are genuine.” Demand can be destroyed by an overly high price and it collapsed after the record rally of 2008 when oil peaked at nearly $150 a barrel before crashing to just above $30.
