From Upstream Online:
World oil demand will increase by less than expected this year and next due to high prices and weaker economic conditions, the International Energy Agency (IEA) said today.
The agency lowered its 2008 world oil demand growth forecast by 100,000 barrels per day to 690,000 bpd and also trimmed its forecast for 2009 global demand growth by 40,000 bpd to 890,000 bpd.
“High prices are having an impact on demand,” said David Fyfe, of the IEA. “The OECD (countries) are feeling the impact.”
Global supply fell by 1 million bpd in August to 86.8 million bpd, the IEA said in its September Oil Market Report. This was due in part to North Sea maintenance, lower Opec supply and disruptions to the Baku-Tbilisi-Ceyhan pipeline.
The IEA, adviser to 27 industrialised countries on energy policy, also cut its forecasts for oil supplies from countries outside Opec.
The agency cut its non-Opec supply forecast by 180,000 bpd for 2008 and by 85,000 bpd in 2009.
Meanwhile, the IEA said any moves to limit oil global production could prove “counterproductive” for the world economy, after Opec agreed to cut output.
Fyfe told Reuters: “We see pressures on the global economy remaining intense. Any move to constrain supply could prove counterproductive.”
Opec ministers meeting in Vienna announced a surpise 520,000 bpd oil output cut this morning following a drop in prices from a record over $147 a barrel in July to $103 a barrel.
“The bottom line is there may be a debate within Opec about $100 or other levels as a floor but our view is prices remain high,” Fyfe said.
“With a fragile economy and the budgets of some developing importer countries under pressure, we would still see the current level of prices as very high.”
So, in response to decreased demand (actually a decrease in the rate of increase in demand), OPEC is planning to reduce production in order to stabilize the price around $100/barrel.