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Global oil demand will rise by 900,000 barrels per day this year despite Europe’s debt crisis and higher oil prices, the Organization of the Petroleum Exporting countries forecast in its monthly oil market report. And despite continuing concerns that a struggling economic recovery in developed economies could offset strong demand from China and India, the group increased production last month to the highest level in more than three years.
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According to the OPEC report, the fundamental forces driving the world market were broadly stable in February. Political tensions between Iran and the West pushed the average OPEC oil price to a three-year high in late February, but weakening demand in Europe and the U.S. have had a negative oil price effect that has undercut the bullish effect of the Iranian standoff, OPEC said in its report. Still, the provider of about 40 percent of the world’s crude increased output to 30.97 million barrels a day in February.
U.S. oil consumption data for December showed a 4.6 percent year-over-year contraction, and preliminary weekly data for January and February displayed similar contracts, OPEC said. Demand declined in Western Europe as well, and looks likely to keep falling in coming months. OPEC predicts a contraction of 1.7 percent, or 240,000 barrels, in Western Europe’s oil demand in 2012. Meanwhile, China boosted demand in January by adding 800,000 barrels a day of crude oil and refined products to its commercial and strategic storage, though Chinese imports of Iranian oil fell by 90,000 barrels a day.
OPEC remains wary that the slower pace of economic growth in the Organization for Economic Co-operation and Development — an economic organization comprised of 34 countries, including the United States, Australia, and most of Europe — is crimping demand and adding more uncertainty to potential consumption growth. “Although economic data points toward a better performance, the situation in Europe along with higher oil prices has resulted in considerable uncertainties on the future oil demand for the remainder of the year,” OPEC said.
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