World oil demand will decline slightly in 2009 but start growing again next year, the OPEC oil producers’ cartel said Tuesday in its monthly report, standing by its previous forecast.

In 2010, the trend was expected to reverse, with demand growing by 0.5 million bpd, or 0.59 percent, as already predicted in OPEC’s July report.

Despite a continuing fall in US oil consumption, increases in demand elsewhere, especially in China and India, had helped maintain the 2009 forecast, the cartel said.

Next year, increases in demand would be seen especially in China and India again, as well as the Middle East and Latin America.

Rising unemployment in the US and European Union and a stronger US dollar were to blame for the drop in oil prices in early July, but these recovered as optimism set in that economic recovery was on the way, the cartel said.

“In the absence of any significant change in oil market fundamentals, this volatility indicates the increasing sensitivity of oil prices to conflicting economic signals,” OPEC said in its report summary.

The organization warned, however, that it might still be too early to speak of a recovery.

“If market expectations for an economic recovery are not fully realized, current (oil) price levels could face increasing pressure,” it added.

Gasoline demand in the US, the world’s biggest oil consumer, “is expected to improve from the sharp decline seen this year but will remain a wild card in 2010,” OPEC also noted.

As a result of the economic downturn, US gasoline demand dropped by 2.0 percent in the May-July driving season this year, compared to the same period in 2008. In the five years prior, consumption had always steadily increased by 1.4 percent in the same three months.

Oil prices climbed Tuesday, nearing US$74 in London, on hopes of economic recovery which may boost demand for energy worldwide, analysts said.

Brent North Sea crude for delivery in September rose 21 cents to $73.71 a barrel in morning London trade.

New York’s main contract, light sweet crude for September, gained 29 cents to $70.89 per barrel.

Source: AFP