Ethanol is taking a bite out of crude oil, this according to a recent OPEC report. An article published in The National, says that rising ethanol use in the United States is dampening demand for petroleum based fuels and this will be felt even more during the next few months.

Next week, OPEC ministers are getting ready to meet in Vienna, and last month OPEC participated in a preliminary report that estimates that $500 billion a year could be spent yer year on fossil-fuel based subsidies. In its latest monthly oil market report issued two days ago, the organization’s secretariat drew attention to an eight-fold increase in U.S. ethanol consumption since 2000. This use should grow as the E15 waiver, which allows consumers the choice to use up to 15 percent ethanol in conventional cars is expected to pass by late summer.

“With the continued rise in US [petrol] stocks and surging ethanol volumes in the [petrol] pool, as well as ample idle refinery capacity, any seasonal upwards movement in the [petrol] market is likely to be limited,” the OPEC report said as quoted by The National.

OPEC also noted in its report that its projected demand for crude oil continues to be less than production leading to an oversupply situation that amounts to around 1.5 million barrels per day (bpd). Typically, stocks begin to dwindle after the first of the year but this year, stocks actually increased. Regardless of the current surplus, OPEC raised its prediction of global oil demand by 100,000 bpd from last month’s report. On Wednesday, a barrel of oil sold just shy of $80.