OPEC today said the world oil market shows signs of weakening in 2007 as economic growth slows, a problem the exporter group seeks to address through its decision last week to cut supply.
In a monthly report, the group that pumps more than a third of the world's oil held its forecast for global demand growth at 1.3 million barrels per day and said a weakening US economy posed risks to the outlook.
"Risks for oil demand appear to be more weighed on the downside, given the dangers to global economic growth emanating from a visibly weakening US economy," the report by OPEC economists at the group's Vienna headquarters said.
The report follows a deal last week by the Organization of the Petroleum Exporting Countries to cut supply by 500,000 barrels per day, or 2 percent, from February 1st. Oil in New York has risen about $2 a barrel since the decision to stand at $63.18.
"This reduction has been scheduled to come into effect after the winter season, ensuring sufficient crude supplies during this strong demand period while addressing looming market imbalances for 2007," the report said.
Forecasts for 2007, including a supply surge from non-OPEC countries of 1.8 million bpd - the fastest growth in two decades - point to "weakening fundamentals," it said.
Rising supply from the Caspian, Africa and other regions would, if realised, reduce demand for OPEC oil to an average of 28.29 million bpd from 28.93 in 2006, OPEC said. The world economy will also grow more slowly.
OPEC expects an expansion of 4.4 per cent next year led by developing countries, down from 5.1 per cent in 2006.