The International Energy Agency, an adviser to 26 nations, cut its forecast for global oil demand this year as a mild winter in the U.S. and Europe sent prices lower.
World demand is forecast to rise 1.6 percent this year to 85.77 million barrels a day, the IEA said in an e-mailed report today, 160,000 barrels a day less than it predicted one month ago. The agency also lowered its forecast for 2007 oil production outside the Organization of Petroleum Exporting Countries.
“Crude oil prices fell to 20-month lows in mid-January as lower demand, due to unusually warm weather and fund repositioning in commodity markets, offset the impact of OPEC cuts”, the Paris-based agency said in its monthly Oil Market Report.
Oil prices fell close to $50 a barrel in New York yesterday as mild weather sapped demand for heating fuel. The slump, from a record $78.40 reached in July, has prompted OPEC to announce two production cuts the group hopes will prevent a supply glut.
The growth in 2007 world oil demand was lowered from the month-ago estimate of 1.7 percent because of mild weather, users switching to natural gas, weaker economic growth in the U.S. and lower-than-expected oil demand in former Soviet Union countries, the IEA said.
“Global oil demand growth is expected to be somewhat less buoyant in 2007 but nonetheless sustained,” the report said. “It should be emphasized once again that a slower U.S. expansion will not necessarily eat too much into oil demand growth.”
OPEC Output Falls
Crude oil production from 11 OPEC members fell about 155,000 barrels a day in December to 28.76 million barrels a day, the IEA estimates. Angola, which became OPEC's 12th member this month, pumped an estimated 1.47 million barrels a day in December.
(Bloomberg, 18/1/07)