Citing continuing signs of a global economic recovery, OPEC - supplier of about 35 per cent of the world's crude oil - revised its estimate for 2010 global demand growth to 750,000 barrels per day. That's up slightly from its 700,000 barrels per day estimate the previous month.
"Although most of signs are pointing towards higher oil demand," OPEC said in its November Monthly Oil Market report, "a potentially weak economic recovery along with higher oil prices are the two main factors that may dampen world oil demand in the coming year."
"Should prices increase and be sustained above the current level, oil demand growth will be pushed down by more than 1 per cent in the OECD countries," the report said, referring to the Organisation of Economic Cooperation and Development.
The cautiously optimistic projection of rebounding demand underscores the uncertainty lingering in the world energy market.
While oil prices have more than doubled since plummeting to the low-$30s per barrel late last year, the world is still far from emerging completely from its worst recession in over six decades. The crisis battered oil demand, depriving bloc members of sales of their chief export and source of government revenue.
Growth rate projections
Global economic growth rate projections are slowly starting to inch back into positive territory, but worries run high that the current recovery could be jeopardised by a number of factors, including higher oil prices.
OPEC said the global economy is forecast to grow at 2.9 per cent after a 1.1 per cent contraction in 2008. It said most of the growth is expected to come from emerging Asian countries, the main drivers in the world's economic growth.
"Even if the expected economic recovery materialises, it remains to be seen whether demand would be able to return to pre-crisis levels," the report said. "Energy policies and behavioural changes are bound to have some impact on consumption and this will gradually feed into overall demand patterns, especially in key sectors such as transportation."
OPEC's 12-member states have held off from announcing any new production cuts since a series of announcements late last year aimed at cutting their combined output by a record 4.2 million barrel per day. That reduction is credited with helping to engineer a rebound in the price of crude, which had collapsed from almost US$150 per barrel in mid-2008 to near US$30 per barrel by the end of the year.
By late afternoon Wednesday Singapore time, the benchmark US crude contract for December delivery was hovering slightly below US$79 per barrel in electronic trading on the New York Mercantile Exchange.
OPEC kingpin Saudi Arabia, home to the world's largest proven reserves of conventional crude oil, has said it sees US$75 per barrel as a fair price for both consumers and producers - a level that will encourage continued investments needed to ensure that supply meets future demand for oil. Other OPEC members have indicated a desire to see prices at closer to US$80 per barrel.