MercoPress. South Atlantic News Agency

World oil demand forecasted to continue contracting

While oil prices ended this week's trading in the range of 35 US dollars the barrel, the International Energy Agency (IEA) has cut its estimates on world oil demand and for the first time since 1982-1983, expects two consecutive years of contracting demand for crude oil.

The two years in question are 2008 and 2009 and the decline is tied to a "worsening of the scenario" in its totality. In 2008, according to the agency, demand declined by 0.3% to 85.8 million barrels per day, while this year, demand will drop one million barrels to 85.3 million barrels per day, equal to 0.6% less than initial forecasts. In its closely watched monthly survey, the Paris-based agency blamed "the relentless worsening of global economic conditions" for its revision. IEA, which represents the interests of 28 oil-importing countries, said it lowered its forecast after nearly halving its estimate for global economic growth to 1.2% in 2009. The agency said it was "forced to anticipate upcoming institutional revisions on the likelihood that the International Monetary Fund and others will shortly cut their forecasts." In its last monthly report, the IEA had predicted a rebound in oil demand this year on the assumption that developed economies would recover in the second half of 2009. The report said oil demand in the countries belonging to the Organization for Economic Cooperation and Development is forecast to fall 2.5% this year, after a 3.3% contraction in 2008. Consumption in the rest of the world will continue to grow this year but at a slower pace, the IEA said. Non-OECD oil demand will grow 1.8% in 2009, down from the 3.7% pace in 2008, the IEA said.