IEA cuts medium-term oil demand forecasts

By Ikuko Kao

LONDON (Reuters) - World oil demand growth is likely to slow down more sharply than previously estimated in the next few years due to the economic downturn, the International Energy Agency said on Friday.

Global oil demand is expected to grow by 220,000 barrels per day (bpd) in 2009 to average 86.37 million bpd, the IEA, which advises 28 industrialised countries, said in its Medium-Term Oil Market report.

It gave its previous forecast, for growth of 350,000 bpd, in a monthly report on November 13.

The cut is the latest in a series of downward revisions in response to evidence that the global economy is weaker than previously thought and to the surge in oil prices earlier this year to a record high above $147 a barrel.

"The economic downturn and the impact of the sharp rise in prices during 2007 and 2008 have dragged down overall levels of demand," the Paris-based IEA said in the report.

"Consequently, these forecasts result in significant downward revisions."

Global refined oil product demand is expected to grow by 1.2 percent on average, or about 1 million bpd, every year between 2008 and 2013, from 86.2 million bpd to 91.3 million bpd, the IEA said.

That is less than the agency's previous medium-term forecast issued in July, which projected demand would grow 1.6 percent, or 1.5 million bpd, every year for the five-year period.