OPEC cuts 2006 global oil demand growth forecast

LONDON, Aug 16: World oil demand will rise more slowly than previously expected in 2006, partly because of record high oil prices, the Organization of the Petroleum Exporting Countries said on Wednesday.

Oil demand this year will rise by 1.3 million barrels per day, 80,000 bpd less than expected a month ago, the producer group said in a monthly report. Growth next year was left unchanged at 1.3 million bpd.

''As a result of the unexpected decline in oil demand in the OECD countries in the second quarter of the year, world oil demand growth was revised down,'' the report said.

OPEC's outlook comes as oil in New York is trading above a barrel, within sight of a record .40 hit in July. High prices are trimming demand in parts of Asia and last week's alleged aircraft bomb plot may curb air travel, OPEC said.

''The planned attack on airliners in London is expected to dent jet fuel demand, at least in the short run,'' the report said. ''High oil prices have somewhat dampened oil demand growth, especially in some Asian countries.'' Even so, world tension and a strain on refineries may keep prices high, despite a rise in OPEC oil output and production capacity, according to the report.

''These positive developments in the upstream may not be sufficient to moderate crude price levels given the ongoing bottlenecks in the downstream and continuing geopolitical tensions,'' OPEC said.

Easing pressure on the group, a rise in supply from non-OPEC producers will lower the need for OPEC's oil next year. Demand for OPEC oil in 2007 will drop by 800,000 bpd to 28.3 million bpd, the report said.

OPEC expects supply from rival producers to rise by 1.8 million bpd next year to 53 million bpd, more than this year's growth of 1.1 million bpd.

This year's estimate was cut by about 200,000 bpd, reflecting the loss of output from the partial shutdown of Prudhoe Bay, BP's Alaskan oilfield.

The International Energy Agency, an adviser to industrialized countries, expects slower supply growth from non-OPEC this year but a faster expansion in 2007.

The loss of output from Prudhoe Bay forced the IEA in a report last week to cut its 2006 forecast for non-OPEC supply growth by 280,000 bpd to 860,000 bpd.

But the Paris-based IEA raised 2007 growth from the independent producers by 190,000 bpd to 1.89 million bpd.

REUTERS