World oil demand is likely to grow by an average of 0.6 percent annually over the 2008-2014 period, the International Energy Agency forecast Monday, revising its mid-term expectations downward amid the global recession. The Paris-based IEA, which advises oil-consuming countries, said oil demand would reach 89 million barrels a day by 2014 under the International Monetary Fund's current forecast of a return to 5 percent annual economic growth by 2012. In 2009, however, oil demand is set to drop for a second-straight year, the first time oil demand has fallen for two consecutive years since 1982-1983. The IEA said the recessionary impact, combined with signs of a structural shift to less intensive long-term oil use, were behind its cut of at least 3 million barrels a day to its oil demand forecasts for the coming five years. Growth in oil demand is expected to come mainly from developing countries in Asia and the Middle East, the IEA said. If the trend continues, demand outside the 30-member Organization for Economic Cooperation and Development will outstrip that within the OECD by 2014, the IEA said. The IEA made Monday's forecast in its medium-term oil market outlook report. It said that under a lower GDP scenario, oil demand would contract by 0.2 percent annually on average to 84.9 million barrels a day. The lower growth forecast “assumes any rebound in the global economy will be slower and attain lower trend growth than the IMF projection,” the IEA said. The use of two growth scenarios “acknowledges the widespread uncertainty over the recovery path likely to emerge from the worst global economic recession in half a century,” the IEA said. A year ago, the IEA said the world's estimated daily oil needs would rise to 94.14 million barrels in 2013. That, too, was a downgrade to its previous year's medium-term estimate and was due to skyrocketing oil prices. The IEA's previous medium-term forecast, issued in December, had forecast growth of a million bpd a year from 2008 to 2013. Algerian Energy and Mines Minister Chakib Khelil said on Monday oil demand was still weak due to the weakness of the US and European economies and world oil stocks remained high. Khelil said an increase in OPEC oil production was hard to envisage, despite rising crude prices. Oil analysts said OPEC can help tighten the oil market significantly later this year if it continues to implement its promise to cut oil production by 4.2 million bpd from its September output levels. “A lot of people seem to be anticipating a third-quarter stock draw, assuming demand is gradually recovering through the end of this year,” said Wittner. “If, at the same time, OPEC continues to restrain output, the stock overhang should start to be whittled away as the third quarter progresses.” Dealers said macro-economic data would continue to have a major impact on sentiment in the oil market. – Agencies US consumer confidence data on Tuesday leads a heavy calendar of economic data this week, including China's Purchasing Managers Index on Wednesday and a US jobs report and manufacturing data on Thursday. Oil prices jumped Monday on tensions in crude producing Nigeria and China's reported plans to rapidly increase its strategic crude oil reserves. New York's main futures contract, light sweet crude for August, lifted $2.33 from its closing price on Friday to end at $71.49. London's Brent North Sea crude for delivery in August gained $2.07 to $70.99 a barrel. The Movement for the Emancipation of the Niger Delta (MEND) militants said the Shell Forcados off-shore platform in Delta state was burning “after a massive explosion” following their 2:30 A.M. (0330 GMT) raid. The market for oil and other commodities will continue to be haunted by the global economic downturn, analysts said. “The natural resource rally, underway since the beginning of the year, seems to be losing momentum,” said Mike Fitzpatrick of MF Global.
