OPEC predicts crude oil demand won’t recover to 2008 levels for four years

In what can be seen as a good news, bad news story for Canada, the OPEC oil cartel is predicting it will take another four years for crude oil use to recover to 2008 levels because of the global recession.

VIENNA — In what can be seen as a good news, bad news story for Canada, the OPEC oil cartel is predicting it will take another four years for crude oil use to recover to 2008 levels because of the global recession.

Wednesday’s forecast was one of several profiled by the 12-member Organization of the Petroleum Exporting Countries in its oil supply and demand outlook to 2030.

It reflected the deep crimp in the world’s appetite for oil because of falling international industrial production and related developments that have lessened crude use.

While reduced demand for crude might seem like good news for consumers facing sticker shock at the gas pump, it likely doesn’t auger well for Canada’s petroleum industry, a major driver of the economy, especially in Western Canada.

As well, the OPEC report is predicting that much of the gradual increase in demand will be focused in Asia as countries in the industrialized West take longer to recover. Virtually all of Canadian oil exports of some two million barrels a day go south of the border, making Canada the largest supplier of crude to the United States, ahead of Mexico, Saudi Arabia and Venezuela.

OPEC meets more than a third of the world’s annual oil demand, which the International Energy Agency has put at nearly 86 million barrels a day for 2008 — about 2.5 million barrels more than for recession-ridden 2009.

In its annual report, the organization said the world would need 87.9 million barrels of crude a day by 2013 — nearly six million barrels less than previously expected. Of that, said the report, OPEC would need to produce 31 million barrels a day, compared with a daily 31.2 million barrels last year.

While some of the reduced demand is due to increased use of biofuels and other energy sources, OPEC said much of it is due to the global economic downturn.

Still, the 250-page report said that energy use up to 2030 was set to rise “under all scenarios,” with oil and other fossil fuels continuing to represent the largest slice of the energy pie.

“Fossil fuels will contribute ”more than 80 per cent to the global energy mix over this period,“ said the report. ”And oil will continue to play the leading role to 2030.“”

Like oil suppliers in general, OPEC was hard hit by the plunge in demand starting last year as the world recession spread and deepened, said the report. It predicted that demand for OPEC crude, after falling this year will “rise slowly over the medium term, returning back to 2008 levels by around 2013.”

It also said that developing countries would account for any increase in demand, with industrialized countries continuing to be more harshly effected by the economic downturn and its protracted aftermath.

Demand from industrialized countries, which peaked in 2005, is expected to fall from a daily 47.5 million barrels last year to 45.5 million barrels a day by 2010 and will likely remain at that level up to 2013, said the report.

Besides forecasting that by 2013, the world’s overall appetite for crude will be 5.7 million barrels a day lower than it had forecast last year, OPEC noted that daily demand had already slumped by more than four million barrels this year.

In developing countries, oil consumption is expected to rise by 23 million barrels a day between 2008 and 2030 to reach a daily 56 million barrels, with “almost 80 per cent of the net growth in oil demand … in developing Asia.”

“Nevertheless, per capita oil use in developing countries will remain far below that of the developed world,” said the forecast.“ For example, oil use per person in North America will still be more than 10 times that of South Asia.”

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