Thursday, December 11, 2008

World oil demand to shrink for first time in 25 years

As the world economy slides deeper into recession, global oil demand will shrink in 2008 for the first time in 25 years, the International Energy Agency (IEA) said Thursday.

"Global oil demand has been revised down in both 2008 and 2009, given a much starker contraction in the OECD than expected, and early signs of weakness in non-OECD countries, notably in Asia," the IEA said in its Monthly Oil Report, issued in Paris.

World oil demand is forecast to average 85.8 million barrels per day (mb/d) in 2008, the IEA said. This is 0.2 percent, or 0.2 mb/d less than in 2007.

"The global demand contraction expected in 2008 will be the first since 1983," the IEA said.

Global oil demand is expected to rise slightly next year, to 86.3 mb/d, or 0.5 percent more than in 2008, the IEA said. However, this still represents a significant downward revision from the agency's last prognosis, in November.

The decline in oil demand has been especially marked in North America, particularly in the US.

Oil product demand in North America plunged by 8.3 percent year-on-year in October, the tenth consecutive monthly decline, the agency said.

"This demand weakness continued to be mostly centred in the United States (minus 9.4 percent year-on-year)," the IEA said.

The agency said the "extremely gloomy picture of oil demand" in the United States was caused by "a financial crisis, high oil prices, devastating hurricanes and, to cap it all, an officially recognised economic recession."

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