OPEC says oil supply gap looming later this year

Energy Reuters

LONDON (Reuters) - OPEC, which failed to reach agreement on raising production at a meeting this week, on Friday forecast a tightening world oil market in the rest of 2011, underscoring the need for more supply to meet rising demand.

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In its monthly report, OPEC said world demand for its crude oil would average 30.7 million barrels per day (bpd) in the second half of the year, much higher than the 28.97 million bpd the 12-member group produced in May.

"Looking to the remainder of this year, the expected supply/demand balance indicates a tightening market," OPEC's report said. "As a result, global inventories could continue to decline as the market enters a period of high seasonal demand."

The Organization of the Petroleum Exporting Countries met for the first time this year on Wednesday and for the first time in around a decade failed to make a decision on output policy.

OPEC Secretary General Abdullah al-Badri said some OPEC members had different numbers and were unable to agree on any need for more oil, even though oil prices are trading well above $100 a barrel.

While Saudi Arabia and some other OPEC members have informally raised output this year, the group has kept its official output target unchanged since December 2008. (Reporting by Alex Lawler; editing by Barbara Lewis)

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