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OPEC cuts 2006 oil demand growth forecast

Written by: Staff
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LONDON, Mar 17 (Reuters) OPEC cut its forecast for 2006 global oil demand growth by 110,000 barrels per day on Friday due to slower consumption in the United States and Asia.

OPEC pegged global demand growth for the year at 1.46 million barrels per day, down from its forecast in its monthly report in February at 1.57 million bpd.

Despite high oil prices, demand growth was still much stronger than in 2005, when world consumption rose by close to a million bpd.

OPEC ministers agreed to keep output unchanged at near 25-year highs at their meeting last week in a bid to bring down high prices and to counter market concern about the potential for major supply disruptions.

Despite brimming stocks, U.S. oil was trading well over a barrel on Friday.

''Global oil demand growth for the curent year has been revised down... to account for the pessimistic view for the persistent year-on-year contraction in U.S. demand during January and February as well as a more pessimistic view for growth from non-OECD Asia,'' OPEC said in its March monthly report.

The removal of government fuel subsidies in some Asian countries has hit demand there, OPEC said.

But the quick pace of economic growth in non-OECD Asia should help compensate for some of that demand erosion, OPEC said.

Strong apparent demand demand growth in China in January was also positive for the global demand picture, OPEC said.

Global demand in 2006 was expected to come in at 84.51 million bpd. OPEC expects to supply just over a third of that, pegging demand for its crude at 28.4 million bpd.

That was 100,000 bpd less than OPEC's demand forecast for its own crude in last month's report, and 200,000 bpd less than demand for OPEC crude in 2005.

OPEC, citing secondary sources, said it produced 29.7 million bpd in February, up 160,000 bpd from January.

The group also trimmed its expectation for supply from non-OPEC producers by about 60,000 bpd to 1.4 million bpd. Non-OPEC was expected to produce around 51.5 million bpd in 2006.

But OPEC said there were still major uncertainties for non-OPEC performance, including the rate of recovery in the U.S. Gulf of Mexico from last year's hurricanes and the impact of prolonged shutdowns in Norway.

''A number of fields in Norway have been shut down for 3-4 days to make repairs, the impact of which is likely to curve output in the months ahead,'' OPEC said.

REUTERS SD PM1749

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