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March 11, 2010

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OPEC ups estimate of global oil demand

WORLD oil demand is projected to grow by 900,000 barrels per day in 2010, OPEC said yesterday, upping its previous month's forecast while cautioning that the increase is hinged on a sustained global economic rebound, particularly in the United States.

The Organization of the Petroleum Exporting Countries, supplier of about 35 percent of the world's crude, raised its demand forecast to 85.24 million barrels per day, roughly 100,000 barrels per day higher than its February projections. It also said demand for OPEC crude was estimated at 29 million barrels a day - some 200,000 barrels per day more than its previous month's forecast - but noted that members were still overproducing.

Describing 2009 as "the worst year in the industry in oil demand since the oil crisis in the 1980s," the 12-member producer bloc said in its March report that global oil demand "has been highly dependent upon the world economy, supported by government-led stimulus plans."

"These stimulus plans have already done a great job of jump-starting many sectors of the economy, including energy," OPEC said, adding that "questions remain as to how long governments will be able to afford supporting their economies."

"Should this support diminish, then world oil demand would of course be impacted," it said, noting that a pullback from stimulus efforts in the US, in particular, before a full recovery could have the domino effect of damping demand growth in other regions as well.

OPEC's projections offer a more conservative take on global demand growth than those of the US Energy Department whose statistical arm, the Energy Information Administration, on Tuesday forecast demand would climb 1.5 million barrels per day - 300,000 barrels per day more than its February estimates.

Either way, the increases mark some good news for OPEC whose members rely on crude exports for as much as 90 percent of their government revenues.

The US EIA said earlier that OPEC members stood to earn US$767 billion from oil exports this year, an almost 34 percent gain from last year when oil prices took a hammering amid crumbling global demand.

OPEC is due to meet next Wednesday, but analysts and officials say production quotas are unlikely to change.


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