By JAMES HERRON
The fundamental forces driving the world oil market were
broadly stable in February, due to the familiar pattern of
consumption growth in Asia offsetting weaker demand in the
West, the Organization of Petroleum Exporting Countries said
This apparent stability belies political tensions between
Iran and the West, over the country's nuclear program, which
pushed the average OPEC oil price to a three-year high late in
Indeed, the bullish effect of the Iranian standoff is
undercut by the negative oil price effect of continued
weakening demand in Europe and the US, OPEC said in its monthly
oil market report.
OPEC left its headline forecasts broadly unchanged from the
previous month. It continues to see global oil demand growing
by 900,000 bpd in 2012 and says the world's need for its crude
oil is stable at 30 million bpd.
This is equal to the exporter group's official production
ceiling, but 970,000 bpd below its February output.
As usual, OPEC shied away from discussing the Iranian
situation and instead highlighted economic weakness in Europe as the main uncertainty in
the oil market.
Recent data hasn't been encouraging, it said.
"US oil consumption data for December showed a 4.6%
year-on-year contraction, the worst observed since July 2009,"
OPEC said. "Preliminary weekly data for January and February
2012 has displayed similar contractions."
Western Europe's oil demand declined in
January and looks likely to keep falling in coming months, it
said. OPEC predicts a contraction of 1.7%, or 240,000 bpd, in
Western Europe's oil demand in 2012.
Offsetting this is consumption growth in Asia, driven
largely by extra demand in Japan, which shut down almost all of
its nuclear reactors following the Fukushima meltdown a year
China also boosted its demand in January by adding 800,000
bpd of crude oil and refined products to its commercial and
strategic storage, OPEC estimated.
Some analysts have speculated that China could absorb into
these strategic stores much of the 600,000 bpd of Iranian oil
imports Europe will ban from July.
Chinese imports of Iranian oil fell by 90,000 bpd in
January, adding to a 40,000 bpd decline from November to
December, the report said.
Dow Jones Newswires