Oil Demand Forecast Cut

Wall Street Journal Online ^ | JUNE 30, 2009 | Spencer Swartz

[Lorianne]

LONDON -- The International Energy Agency made a large cut to its medium-term forecast for total world oil demand, suggesting the impact of recession and energy-efficiency efforts may help check future increases in the price of crude oil.

The Paris-based IEA said in a report it expects global oil demand by 2013 to average 87.90 million barrels a day, down 3.7%, or 3.35 million barrels a day, from its December forecast. The latest projection is a massive 6.24 million barrels a day, or almost 7%, below the IEA's 2008-13 forecast issued in July.

But the report also highlights how reduced investment and other "above ground" factors -- such as the practice of reserving the best blocks for national oil companies -- are hurting supply. That could mean much higher crude prices down the road if economic growth quickly returns to rates of more than 3%.

The agency now expects output from non-Organization of Petroleum Exporting Countries to drop 400,000 barrels a day in the 2008-2014 period, led by Mexico and Russia, compared with a previous forecast of an increase of 1.5 million barrels a day. OPEC's 12 members are expected to add 560,000 barrels a day in new pumping capacity.

[SuperLuminal]

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