China cited for cut to Opec estimates

The International Energy Agency has trimmed demand forecasts for Opec crude in the second half of the year amid signs of slowing growth in China and as output from the producer group rose to a seven-month high.

The Organisation of Petroleum Exporting Countries would need to provide an average 29.8 million barrels a day in the second half, the IEA said yesterday in its monthly market report, lowering its assessment from the previous report by 200,000 barrels.

That would require Opec to cut output by 1.1 million barrels from the 30.9 million it pumped last month. The agency kept its global oil demand estimates for this year unchanged.

"While Europe's economic woes are taking a toll on demand, there are mounting signs that China's oil use, like its economy, may have shifted to a lower gear," the Paris-based agency said.

Brent crude has lost almost 8 per cent this year, trading yesterday at US$102 a barrel on the ICE Futures Europe exchange, as economic stagnation in Europe, slowing expansion in China, and threats to recovery in the United States constrain fuel consumption. Opec pledged at its most recent meeting on May 31 to restrain excess production.

Global oil demand will rise by 785,000 barrels a day, or 0.9 per cent, to 90.6 million a day as "relatively sluggish macroeconomic conditions are expected to keep a lid on growth", the IEA said.