OPEC says oil prices a bubble, not fundamental demand

VIENNA, April 15, 2008 (AFP) – OPEC on Tuesday left unchanged its 2008 estimate of growth in world oil demand, arguing that while high prices and slowing economies would brake demand in major industrialised countries, appetite for crude would remain robust elsewhere. . On a day when the price of crude in New York jumped to a record 112.78 dollars a barrel, OPEC said price hikes reflected high volatility.

Such volatility, it said, was primarily due to “non-fundamental” factors such as financial market turmoil, the weaker dollar and a worsening outlook for the US economy.

“World oil demand is forecast to grow by 1.2 million barrels per day (bpd) in 2008 to average 86.97 million bpd, unchanged from last month,” the Organisation of Petroleum Exporting countries said in its April monthly report.

The slowing world economy and mild winter in some industrialised members of the Organisation for Economic Coooperation and Development were the main reasons behind weak demand, OPEC argued.

However, “non-OECD oil demand — mainly from China, the Middle East, India, and Latin America — is forecast to be strong, offsetting weak OECD oil demand this year.”

OPEC also left unchanged its estimate for world oil demand growth in 2007, when it was projected to hav