Oil demand to hit record high this year, warns OPEC

Oil traded flat on Tuesday after the Organization of Petroleum Exporting Countries (OPEC) said global demand will be the highest ever this year, although the "unsteady" global economy may slow demand more than previously thought.
Brent crude, which is used to price many international oil varieties, rose just four cents to $117.20 per barrel on the ICE Futures exchange in London by 5pm.

Analysts and investors pay special attention to world demand forecasts. The expectation that China and other developing nations will keep using more crude has supported prices this year despite weak gasoline consumption in the US and a festering credit crisis in Europe that has raised concerns about international demand for oil.

While OPEC thinks global demand will continue to increase this year to the highest levels ever, the monthly report it released on Tuesday said that demand won't grow as much as it previously expected. The cartel said daily world consumption will increase this year by 1.36m barrels - down from a previous estimate of 1.38m barrels - to an average 88.18m barrels.

OPEC said it cut demand expectations "as the unsteady global economy has added risks to the forecast". The report also said it's hard to estimate how much oil the US will consume this year. Gasoline consumption fell ahead of the summer driving season as retail prices approached a national average of $4 per gallon. A gallon of regular has since dropped by nearly 35 cents to a national average of $3.636 on Tuesday, according to AAA, Wright Express and Oil Price Information Service. It's still 92.1 cents higher than the same time last year.

Meanwhile, the Labor Department said on Tuesday that job openings were flat in May, suggesting that hiring may not pick up this summer. The US trade deficit also jumped in May to the highest level since October 2008, primarily because of a surge in the price of oil imports at that time.

Source: THE TELEGRAPH