IEA Cuts Oil Growth Forecast

The International Energy Agency (IEA) has cut its forecast for world oil demand growth, leading to a US$1 drop oil in prices today. The IEA reduced its forecast for the rest of this year and into 2008, concerned that the steady rise towards $100 a barrel is already slowing consumption.

There are strong indications that “the high prices are depressing demand, which, together with signs of higher output from Saudi Arabia, Iraq and Nigeria have capped further price gains”, the IEA report says.

Analyst for Brewin Dolphin Investment Banking in the UK David Macnair can see why the IEA is concerned but adds that “oil consumption would only slow down if prices remained at US$100 over a long period of time”.

The IEA report reveals that world oil supply has seen a monthly gain of 1.4 mb/d in October, as non-OPEC outages receded and OPEC volumes increased.

Opec crude supply last month increased by 410 kb/d to 31.2 mb/d, with half the rises from Angola and Iraq where supplies are expected to increase further in November.

By Ozge Ibrahim