LONDON (Reuters) - World oil demand growth will return in 2009 after shrinking this year for the first time since 1983 due to the global economic slowdown, the International Energy Agency (IEA) said on Thursday.
The IEA’s view is in stark contrast to the U.S. Energy Information Administration, which on Tuesday said demand is expected to shrink by 450,000 barrels per day in 2009 following a predicted 50,000 bpd decline in 2008.
In its monthly report, the Paris-basd IEA cut its 2008 oil demand estimate by 350,000 bpd to 85.8 million bpd -- a 200,000 bpd year-on-year fall.
The adviser to 28 industrialized countries sees demand rebounding to 86.3 million bpd in 2009, based on the International Monetary Fund’s assumption the global economy will gradually recover in the second half of next year.
“Our working scenario rests on assumed resilience outside of the Organization for Economic Co-operation and Development (OECD) regions, albeit with slower growth than in the past five years,” the IEA said.
“This month’s report saw scant amendment to recent non-OECD demand data (in contrast to the OECD), and therefore we resist the temptation to jettison growth for 2009, despite weaker economic indicators in some cases.”
David Fyfe, head of the IEA’s Oil Industry and Markets Division said the agency’s forecast still demonstrated global economic weakness in 2009.
“It’s marginally higher growth from a lower base,” Fyfe said. “Less than half a million barrels per day of demand growth still indicates a weak market in 2009.”
The IEA said non-OECD demand could be revised lower if more pessimistic economic forecasts were borne out.
“Structurally, the west is going to take a lot longer to recover than emerging markets which we see starting to pick-up toward the end of this year, which should support demand,” said Helen Henton, head of commodities at Standard Chartered Bank.
“With prices now at much lower levels we could see demand start to recover. The situation might be stabilizing.”
OIL INVENTORIES RISE
As demand has fallen during the economic slowdown, oil inventories in OECD countries have risen sharply.
Stocks at the end of October equaled 56.8 days of demand, well above the five-year average, the IEA said.
It said there would likely be lower demand for crude oil from the Organization of Petroleum Exporting Countries (OPEC) in 2009.
“Our own supply and demand balances suggest a lower ‘call on OPEC’ in 2009 at 30.7 million bpd, versus 31.5 million bpd in 2008,” the IEA said.
It also lowered its forecasts for supply from outside OPEC in 2009, leading to a 200,000 bpd increase in the amount it said OPEC needed to pump to balance the market.
OPEC is expected to cut output by at least 1 million bpd when it meets in Algeria on December 17, as the producer group tries to shore up prices which have dropped to about $45 a barrel, more than $100 below an all-time high above $147 hit in July.
OPEC, source of two in every five barrels of oil, has already cut member output quotas by 2 million bpd since September.
Oil prices were higher after the IEA report was released. U.S. crude was up $1.41 at $44.93 a barrel at 5:16 a.m. EST.
Reporting by David Sheppard; Editing by Peg Mackey and Sue Thomas
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