KARACHI - The OPEC crude oil prices have plummeted to $95 per barrel due to global economic recession. In July this year, the OPEC crude oil prices peaked at $144/barrel, but by August 12, 2008, the prices of OPEC crude oil have gradually dropped to $95 as the reports of global economic slowdown continued to grip the entire world that had dampened the demand and consumption of oil due to its unafforable prices. In its monthly report, issued on Monday, OPEC said the softening economic situation has led to a further slowdown in oil demand growth. A good indicator of the decline in oil demand growth has been the drop in US gasoline consumption this year. Over the previous four years, US gasoline demand has seen an average y-o-y increase of 0.7 per cent in the first seven months of the year. This year, however, US gasoline demand has actually fallen by 1.7 per cent y-o-y, the first drop since 2004. This slowdown in consumption growth is expected to persist into 2009, where yearly oil demand growth is seen rising by 0.9 mb/d, the slowest pace since 2002. While demand growth has slowed, the performance of non-OPEC supply has begun to improve and is expected to see healthy growth in the coming year. Following a period of consecutive downward revisions, recent data for July shows non-OPEC supply growth lending support to the yearly forecast of a rise of 580 tb/d in 2008. This emerging upward trend is expected to continue into 2009, with the current forecast expecting an increase of 950 tb/d. Despite market fundamentals indicating little need for additional crude, OPEC members have increased production to help calm markets. In July, OPEC output reached 32.64 mb/d, representing a gain of 780 tb/d since April. With current production, OPEC is now producing well above the demand for its crude. The healthy supply situation has been reflected in the shape of the forward market, which has shifted into contango since late May, indicating prompt supply is more than sufficient to meet demand. Other factors have also helped to ease prices. In addition to the reduction in geopolitical tensions in some producing regions, the recent strengthening of the US dollar against major currencies has reduced the incentive to invest into commodities including oil as a hedge against currency movements and inflation. The resurgence of the dollar came as markets have reassessed the relative growth outlook for the US versus other OECD regions in the coming months and on mounting evidence of a global slowdown. The world economy is seen to grow at 3.9 per cent this year, 0.1 per cent down on last month's forecast and around 1.0 per cent lower than in 2007. For 2009, the forecast of 3.8 per cent is also 0.1 per cent lower than last month's, mainly due to downward revisions made to all major OECD regions. In contrast, Developing Countries' growth in 2009 is unchanged at 5.6 per cent. For 2009, India's growth was revised up 0.2 pp to 7.7 per cent while China's is unchanged at 9.2 per cent. US economic expansion next year is now projected at 1.3 per cent, down 0.3pp from the previous month, but still higher than the prospect of 1.1 per cent growth in Japan and the Euro-zone. The dollar strengthened on the perception that the rest of the world - mainly other OECD regions - were facing increasing headwinds and were slowing down fast, while the US is seen to have been more proactive in resolving economic and financial sector problems. Japan is on the brink of recession after 2Q08 real GDP fell at an annualized rate of 2.4 per cent. Eurozone growth was also negative in 2Q08 falling at around 0.8 per cent annualized rate. In contrast, US grew at 1.9 per cent rate in 2Q08, buoyed by the fiscal stimulus. However, the US outlook for the 2H08 has worsened, with no bottom yet in sight for the housing sector.  US oil demand has been badly hurt this summer by slowing economy and high oil prices. Transport and industrial fuels declined the most, pushing the country's total oil demand down by 3.8 per cent or 0.8 mb/d in the first seven months.