LONDON -- OPEC on Tuesday warned that a slowing U.S. economy and fallout from the subprime mortgage crisis could cut oil consumption in the rest of 2007.
OPEC, in its August Monthly Oil Market Report, also repeated its view that major consumers have enough crude stocks, despite calls for more oil. The report, OPEC's last before it meets on Sept. 11 to set supply policy, indicates the group is unlikely to boost output, analysts said.
"It suggests to me that in the run-up to this meeting, OPEC is still leaning towards doing nothing and will maybe agree to a quick follow-on review of the latest market data," said Adam Sieminski of Deutsche Bank.
Oil has fallen to around $72 a barrel in New York from a record high of $78.77 reached on Aug. 1 because of concern that worsening credit conditions and a slowdown in the United States could take a wider economic toll.
Story Continues Below
Subprime lenders make loans to people with poor credit ratings. A number have recently reported losses amid rising delinquencies.
"The more bearish economic trend which has materialized in recent weeks could negatively impact demand growth in the second half of the year," OPEC said in the report.
The Organization of the Petroleum Exporting Countries sees higher demand for now partly because of lower-than-expected production from countries outside the 12-nation group.
It expects the need for OPEC oil to average 31.32 million barrels per day in the fourth quarter, up 190,000 bpd from July's forecast and much higher than the 30.38 million bpd the group pumped in July.
World consumption will rise by 1.3 million bpd, or 1.5 percent, in 2007, slightly up from the previous projection because of demand from Japanese power plants, OPEC said.
The report repeated the group's view that crude stocks are adequate in the United States and other economies in the Organisation for Economic Co-operation and Development.
"With OECD total crude oil stocks at close to decade-highs and U.S. inventories at particularly comfortable levels, crude oil stocks appear sufficient to meet the forecast demand levels."
SLOWER U.S. GROWTH
Crude was up 52 cents at $72.14 a barrel at 1345 GMT, boosted by central banks' moves to pump cash into financial systems and Atlantic storms that could disrupt U.S. Gulf production.
Oil's drop this month followed data showing slower growth than expected in the U.S. service sector and job creation, concern about the subprime crisis and selling of oil futures by speculators, OPEC said.
OPEC cut its estimate for U.S. economic growth this year to 1.9 percent from the 2.1 percent published in July and warned of growing doubts about the outlook. The U.S. is the world's top oil consumer.
"The downside risks to the U.S. outlook have increased during the past month casting doubts on the expectation of a gradual U.S. economic recovery in the second half of the year," said the report.
OPEC, source of more than a third of the world's oil, left its forecast for world oil demand growth next year little changed at 1.35 million bpd, much lower than some projections.
The International Energy Agency, an adviser to 26 industrialised countries, said in its own monthly report on Friday demand would surge next year by 2.2 million bpd.
The IEA has repeatedly urged OPEC to pump more oil to lower prices, a call OPEC has rebuffed.
OPEC decided last year to lower output by 1.7 million bpd and Tuesday's report showed most members keeping a lid on supply.
The 10 OPEC members, excluding Iraq and Angola, bound by production cut deals pumped 26.569 million bpd in July, up from 26.524 million bpd in June, the report said, citing data from secondary sources.
© Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters.
Editor's note:
Will the Liquidity Crisis Sink Your Stocks? 12 Ways to Profit.
The Mother of All Financial Disasters
Buffett: The best book ever written on investing.
