The OPEC oil cartel on Thursday said it expected a surge in oil demand to slow next year, projecting weaker economic growth in North America and China.
"Lower economic growth in 2005 is expected to lead to an easing of incremental demand from the high rates seen in 2004," OPEC said in its monthly Oil Market Report.
OPEC forecast demand growth of 1.5 million barrels per day in the 82 million barrels per day world market next year, compared to 2.5 million barrels per day this year which was the fastest increase since 1977, the report said.
The Organisation of the Petroleum Exporting Countries last week agreed to cut one million barrels per day of excess supply above formal production quotas from January 1 to limit an out-of season stock build during the northern winter.
Prices have risen sharply this week in part on fears that the OPEC cuts will exacerbate a shortage of winter heating oil in major consuming centres. OPEC said these fears were misplaced.
"Due to long shipping times, (the cuts) will not be felt in the market during the peak winter demand months in the northern hemisphere, which implies that ample supply for winter is already on the way," the report said.
OPEC will meet again on January 30 and some ministers have said that further cuts are likely to be needed.
OPEC production in November fell 419,000 barrels per day to 29.76 million barrels per day, pulled down by disruption to Iraq's supply, the report said.
OPEC estimates fourth quarter demand for its oil at 28.78 million barrels per day, and 28.34 million barrels per day for the first quarter next year, the report said. This implies a stockbuild of 1.2 million barrels per day over the two periods if OPEC had kept pumping at November rates.
OPEC projects 6.4 percent growth in Chinese demand next year, down from 14.2 percent this year, the report said.
"China represents a major risk to next year's demand forecast, with the main question being whether China's demand for crude and petroleum products will normalize in 2005," the report said.
OPEC also revised down its estimate of non-OPEC supply growth this year due to technical problems in synthetic crude production from Canada and lower than expected supply from Russia.
Total non-OPEC supply growth is forecast at 1.17 million barrels per day this year and 1.22 million barrels per day next year, the report said.