OPEC raises 2006 non-OPEC supply forecast by 34,000 b/d

London (Platts)--16Nov2005

OPEC on Wednesday raised a forecast for demand for its oil this quarter
because of lower-than-expected supply from rival producers and said oil use
was showing signs of recovery after lagging estimates for much of 2005.

     The 11-nation group will need to produce 30.32-mil b/d this quarter, OPEC
said in its Monthly Oil Market Report for November, 276,000 b/d more than
expected a month ago. OPEC also trimmed an estimate of growth in supply from
non-OPEC producers this year to just 350,000 b/d. 

     A brighter outlook for the world economy is undermining the view that the
surge in crude prices to record highs this year is eroding growth in oil
demand, OPEC said. This is the last report from OPEC's economists in Vienna
before the cartel's oil ministers meet Dec 12 to set output policy. 

     "Following six consecutive monthly downward revisions, world oil demand
has shown signs of recovery in the last couple of months," the report said of
the 2005 forecast. "The slightly higher figures...indicate that we were right
to refute last month's presumption of 'demand destruction.'"

     Global oil demand next year will rise by 1.52-mil b/d, the report said,
up 50,000 b/d from last month's projection. 

     Crude oil prices have been declining from the record highs set in August
because of slowing growth in demand and a mild start to winter in the US and
Europe. Prices could rebound should the weather turn colder, OPEC said.
     "As the US market continues to be short of middle distillate products, a
cold snap could reverse the current bearish sentiment, providing support for
both product and crude prices," the report said.

     CONTRAST WITH IEA

     The increase in OPEC's demand growth forecast for 2006 contrasts with the
latest outlook from the International Energy Agency, a Paris-based adviser to
26 industrialized countries.

     Last week, the IEA trimmed its 2005 demand growth estimate by 70,000 b/d
to 1.2-mil b/d and lowered next year's estimate by 90,000 b/d to 1.66-mil b/d.
     OPEC raised a forecast for non-OPEC supply by 34,000 b/d next year and
said its 11 members were currently pumping 30-mil b/d.
--Alex Lawler, alex_lawler@platts.com

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