The International Energy Agency cut this year's forecast for world oil demand growth for the second consecutive month citing increasing evidence that high oil prices are having a marked impact on U.S. and European appetite for oil, saying that further cuts could lie ahead.
World oil demand growth, a key indicator that is closely followed by the global crude market, was revised down by 230,000 barrels a day to 1 million barrels a day, the IEA said in its May oil market report, released Tuesday. That translates to 1.2% growth in 2008 compared with 1.5% growth forecast in last month's report.
It follows the IEA's biggest downward revision in seven years the previous month, when it slashed world oil demand growth by 460,000 barrels day.
The report noted that in the U.S. gasoline, jet fuel and kerosene use had shrunk for the fourth consecutive month, while the combination of a slowing economy and ever-higher prices was finally taking a toll on transportation fuel.
Lawrence Eagles, head of the IEA's oil market division and editor of the report, said there was anecdotal evidence of Americans adjusting driving habits and opting for more fuel-efficient cars, which was "very significant because (transportation fuel) has been one of the few areas where growth has been relatively robust."
The IEA may trim demand further and would be looking closely at demand in Europe and other emerging economies that may have to scale back government fuel subsidies, which could cause "mini-demand shocks," Eagles said.