By Alexander Kwiatkowski
Sept. 10 (Bloomberg) -- The International Energy Agency, an adviser to 27 nations, cut its forecast for global oil demand in 2008 and 2009 as high crude prices and the economic slowdown reduce U.S. consumption.
The IEA lowered its 2008 forecast by 100,000 barrels to 86.8 million barrels a day, and the 2009 estimate by 140,000 barrels to 87.6 million barrels a day, the Paris-based agency said today in its monthly report. Declining consumption in developed economies is partly offset by higher fuel demand forecasts for China, India and Iran.
``A combination of weak economic prospects and persistently high prices appears to be having an impact on consumer behavior and choices,'' David Fyfe, the head of the IEA's oil industry and markets division, said in a telephone interview.
Oil prices have fallen about 29 percent since reaching a record $147.27 in New York in July, as drivers in the U.S., the world's biggest gasoline consumer, switch to smaller cars and make fewer journeys. Slower demand led the Organization of Petroleum Exporting Countries today to limit production at levels below current output. The IEA warned that the drop in U.S. consumption may last longer than previously expected.
`More Marked'
``The demand impact of weaker economic conditions and high prices during the summer, when oil prices reached an all-time peak, was more marked than expected, notably in the U.S.,'' the report said. There is evidence of a ``marked shift to more efficient vehicles, changing mobility and driving habits, signs that suburban living is gradually losing its appeal and ongoing modifications in business practices,'' it said.
As consumption in the most industrialized countries slows, fuel demand in developing nations such as China and India is increasing, the IEA said. The group forecasts demand from countries outside the Organization for Economic Cooperation and Development to rise 4 percent, or 1.5 million barrels a day, in 2008 to 38.3 million barrels a day. That's 50,000 barrels a day more than forecast last month.
In 2009, non-OECD demand is forecast to rise 3.7 percent, or 1.4 million barrels a day, to 39.8 million barrels a day, 20,000 barrels a day higher than previously expected, the IEA said.
The IEA still expects oil demand to increase in 2008 by 0.8 percent, or 700,000 barrels a day compared with 2007, and by 1 percent, or 900,000 barrels a day in 2009.
Outages
OPEC pumped 32.5 million barrels a day last month, 195,000 barrels a day less than in July because of field and pipeline outages in Iraq, Angola, Libya and Nigeria, according to IEA estimates.
Global oil supply fell about 1 million barrels a day to 86.8 million barrels a day because of North Sea field maintenance and the shutdown of the BTC pipeline from Azerbaijan to Europe, according to the report.
OPEC, which supplies more than 40 percent of the world's oil, will need to provide about 31.8 million barrels a day this year to balance world supply and demand, the report showed. That's about 100,000 barrels a day more than it estimated last month. Next year, the so-called ``call on OPEC crude'' will be 31.1 million barrels a day, the same level the IEA forecast last month.
Tame Prices
OPEC has increased production this year, taking output above its agreed targets, to balance shortfalls elsewhere and satisfy the developing world's thirst for crude. Most of the increase has come from Saudi Arabia, which pledged to raise output by 500,000 barrels a day through June and July to calm prices.
Members of the producer group today agreed to adhere more strictly to its 11-member target of 28.8 million barrels a day, about 520,000 barrels lower than its July output. Iran and Venezuela were among members that favored action to support falling prices, with the Venezuelan Oil Minister Rafael Ramirez calling on the group to defend an oil price of $100 a barrel.
OPEC's decision to remove barrels from the market could prove to be ``counterproductive'' in the current environment, the IEA's Fyfe said. ``High oil prices are still hurting.''
Crude oil for October delivery traded at $104.08 on the New York Mercantile Exchange at 9:55 a.m. London time.
The IEA also trimmed its projections for supply from outside OPEC this year by 180,000 barrels a day to 49.9 million barrels after hurricanes caused the shutdown of production in the Gulf of Mexico. Non-OPEC oil supply for 2009 will be 50.7 million barrels a day, 85,000 barrels a day less than forecast last month because of lower Russian, Norwegian, Australian and Chinese production, the IEA said.
To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net
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Wednesday, September 10, 2008
IEA Lowers Oil Demand Forecast as U.S. Curbs Spending
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