IEA forecasts slip in crude oil demand

Demand for oil will slip in the coming months amid a global economic downturn, the International Energy Agency said April 11 — but prices may remain high because of uncertainty over supply.

The Paris-based IEA revised downward its overall forecast for oil demand in 2008 by 310,000 barrels per day to 87.2 billion, following new projections on slumping worldwide economic growth by the International Monetary Fund. Declining U.S. demand drove the revision.

Falling demand in rich countries in the past delivered some relief from high oil prices, which retreated April 11 to below $110 a barrel in Asian trading. But the IEA report also noted a drop in global oil supply in March, by 100,000 bpd.

The report forecasts a global oil supply surplus in April and May, but notes that a similar surplus last year did not stem rising oil prices. Pipeline sabotage in Niger and Iraq and a strike in Gabon in recent weeks “illustrate the potential for downside supply risks,” the report says.

Despite weakening economic growth, prices remain high because of “concerns that projected stockbuilds may not materialize, or may not be high enough to cushion against low spare capacity and geopolitical risks,” the report says.

—The Associated Press