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October 14, 2009

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OPEC sees global demand up

A REBOUNDING global economy spurred on mainly by China and other developing nations is expected to boost world oil demand by slightly under 1 percent next year, OPEC said yesterday, while cautioning that the pace of recovery remains far from certain.

In its October Monthly Oil Market Report, the 12-nation group that supplies over 35 percent of the world's crude said demand was expected to grow by a daily 700,000 barrels to average 84.9 million barrels per day. That represents a 200,000 barrel per day upward revision from the Organization of the Petroleum Exporting Countries' September report.

"Given the recent improvement in the economic performance of OECD and China, oil demand is expected to be better than earlier forecast," OPEC said, referring to the Organization for Economic Cooperation and Development. It added, however, that the economic recovery in 2010 will be "slow and weak."

"The bulk of the growth in next year's oil demand will take place in non-OECD, mainly China, the Middle East, India and Latin America."

The report offers the latest hint of a silver lining in a market that spent much of the second half of last year on a steep downhill from crude's record peak of over US$147 per barrel reached in July 2008.

The projections echo a report last week by the International Energy Agency, the Paris-based adviser to oil-consuming countries, which said global crude demand would reach 86.1 million barrels a day in 2010, up 1.7 percent from this year.

The growth is welcome news for OPEC, whose member states have seen their revenues take a pounding as the price of crude - their chief export - fell in tandem with the deepening of the world's worst recession in over six decades.

Buoyed by a series of output cuts OPEC implemented through December and aimed at cutting its output by 4.2 million barrels per day from September 2008 levels, crude has climbed steadily since the start of this year.

Oil has hovered around the US$70 per barrel mark for months.


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