IEA cuts ’08 forecast for demand growth

The International Energy Agency on Feb. 13 cut its forecast of 2008 global oil demand growth and pinned the expected drop on slowing world economic activity caused by U.S. financial woes taking root elsewhere in the world.

In its widely watched monthly oil market report, the Paris-based agency, energy advisor to the world’s wealthiest nations, cut its world crude consumption forecast by 310,000 barrels per day from its January report, after the International Monetary Fund recently lowered its outlook for world economic activity.

The IEA sees 2008 world oil demand growing by 1.7 million bpd from last year, down from the 1.98 million bpd forecast in January. Overall, crude consumption globally is expected to average 87.6 million bpd, representing an increase of 1.9 percent from 2007, down from the IEA’s forecast of 2.3 percent in January.

Declining oil consumption, which tends to closely track economic activity, could inject some slack into the relatively tight global oil market and provide some relief to consumers with weaker crude prices, which hover at almost $93 a barrel.

But shrinking crude consumption could also move the Organization of Petroleum Exporting Countries to tighten its leash on production when it meets in early March if the producer group feels global crude supplies could build too quickly and threaten oil prices below $80 a barrel.

—The Associated Press