IEA Cuts Oil Demand Forecast On Record Prices

The International Energy Agency revised its forecast for oil demand, predicting high prices and slower growth will reduce demand. IndiaInfoLine reported the story, excerpted here:

The International Energy Agency (IEA) on Tuesday cut its five-year forecast for global oil demand, saying that record high prices and slower economic growth will reduce demand. The Paris-based agency cut more than 3mn barrels per day from its 2012 global demand forecast.

A drop in OPEC spare capacity to 1 million barrels per day by 2013 will keep the market tight, the IEA said in its Medium-Term Oil Market report. The agency, which advises 27 of the world’s most industrialised nations, cut oil demand estimates for each year between 2009 and 2012 by about 3%.

The IEA forecast that global oil demand will rise to 86.87mn barrels a day in 2008, down 1.4mn from the 88.27mn barrels it projected in last year’s report. It also lowered its demand forecasts for the years 2009 to 2012.

Global oil demand will expand by 1.5mn barrels a day, or 1.6% a year on average in the five years between 2009 and 2013, the agency said, compared with a forecast of 2.2% a year to 2012 in its previous report, issued last July.

The IEA trimmed its 2012 outlook most, by 3.43mn barrels a day, or 3.7%, to 92.39mn barrels a day. Demand will be 94.14mn barrels a day in 2013. The 2009 projection was cut 2.6% to 87.74mn barrels a day.

The agency attributed its lowered forecasts to rich countries’ consumers cutting back on gas-guzzling trucks and SUVs in favor of more efficient cars.

“High prices are clearly affecting consumer behavior, particularly in the OECD transportation sector, with a visible switch away from SUVs and light trucks in the US,” the IEA said in the annual report.

Gasoline has reached more than US$4 a gallon in the US, the world’s biggest energy consumer. US gasoline purchases have dropped every week since the start of the peak driving season last month.

Source: indiainfoline.com