OPEC MEETING

The International Energy Agency maintained its outlook for global oil demand in 2011, while warning that prices above $100 a barrel are hurting the global economy, including the US and Asian economies. Worldwide oil consumption will not increase by 1.4 million barrels a day, or 1.6 percent, this year as expected due to the inflated prices, the Paris-based adviser said today in its monthly Oil Market Report. Preliminary data “already show signs of oil demand slowdown” and global supplies are starting to look “thin” as the Libyan conflict strains spare production capacity held by the Organization of Petroleum Exporting Countries. Crude futures climbed above $110 a barrel in New York for the first time in 30 months on April 7 as forces loyal to Libyan leader Muammar Qaddafi launched strikes on the country’s oilfields. Oil traded around $109 today. Yesterday the International Monetary Fund lowered its 2011 forecast for U.S. growth, citing the strain from fuel costs, and Goldman Sachs Group Inc. (GS) said there are “nascent signs of oil demand destruction.” The U.S., the world’s largest economy and biggest consumer of crude, will expand 2.3 percent this year, down from the 3 percent projected in January, the IMF said. The IEA reported that preliminary January and February data suggest that persistently high oil prices have already started to dent demand growth. Societe Generale SA said yesterday that growth in U.S. demand “faded to zero” in March from 600,000 barrels a day in January. OPEC, responsible for about 40 percent of global oil supplies, has about an “effective” spare capacity of about 3.91 million barrels a day, the IEA estimated. This level “begins to resemble the thin flexibility margin” that helped drive the rally in prices during the last decade. The 11 members of the producer group bound by quotas pumped 26.51 million barrels a day last month, the lowest since May 2010, following supply losses arising from armed conflict in Libya, the agency said. Iraq is exempt from the quota system. All 12 members meet in Qatar next Monday 18-04-2011to decide on additional sales of crude to reduce their official selling prices.