IEA Expects Oil Demand to Go Down in 2009
The International Energy Agency has announced in its latest report that the global oil demand will reduce aggressively in 2009 as the global economic slowdown further eats away consumption. IEA in the report released on January 16th 2009 amended its former 2009 approximation down by 940,000 barrels per day to 85.3 million barrels per day, a decrease of 500,000 barrels per day year on year. It said that “Forecast global oil demand has been sharply revised down for 2009, accompanying a reappraisal of global economic prospects.”
David Fyfe, head for oil industry & markets section of IEA said that the 940,000 barrels per day revision to its 2009 approximate is the biggest single month’s revision in recent times…
The agency estimated that Chinese oil demand development at just 90,000 barrels per day in 2009, as its GDP growth is seen slowing to 6.5%. In light the slowdown in world economies, the IEA has taken the step of pre empting further revisions to global economic growth projections from the IMF and other agencies on which it bases its assumptions.
Mr Fyfe added that ‘It’s really become perceptible since our last report that the major establishments have been flagging a downgrade to economic growth forecasts for 2009. We’ve taken a robust approach this month, but you can never say never in terms of the risks.”
As requirement drops amid the ongoing economic slow up, oil inventories in the Organization for Economic Cooperation and Development have continued at high levels. Stocks at the end of November 2008 equaled 56.4 days of cover, compared with 56.8 days at the end of October 2008.
The IEA also noted that the output cuts by the OPEC members which total 4.2 million barrels per day since September 2008, could reduce stockpiles as the producer group’s current output targets are lower than projected demand for its crude oil.
The IEA sees the demand for Organization of Petroleum-Exporting Countries crude at between 29.5 and 30 million barrels per day in 2009. If the producer group succeeds in hitting its reduced production targets, output from all 13 OPEC members should total 28.2 million barrels per day. However it added that the estimated 50 to 80 million barrels of oil which is in floating storage due to the slowdown in demand could hamper OPEC’s ability to reduce the stock overhang.
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