IEA cuts oil demand growth forecast

LONDON: The International Energy Agency cut its global oil demand
growth forecasts for this year due to persistent high prices and lower
growth projections for developed economies.
In its monthly oil report on Thursday, May 12 the Paris-based agency
warned that high oil prices could dent the fragile economic recovery.
"Persistently high prices at this stage of the economic cycle may
ultimately sow the seeds of their own destruction. Until then, the
market confronts fundamentals that still look likely to tighten in the
second half of 2011," it said in the report.
Preliminary March data showed a marked slowdown in global oil demand,
the agency said, although the data could be distorted by the
devastating earthquake in Japan and the Easter holiday period.
"Nonetheless $4 gallon gasoline is likely to yield an anaemic U.S. driving season," the agency said.
Regarding the recent price corrections, the energy watchdog said that
worries about the economic impact of strong prices together with weak
economic data from the United States, China and Germany had contributed
to some degree of profit taking.
"But as the dust settles, prices have again begun to creep higher,"
it said. "The market bull run may have legs for a while longer."
The IEA advises 28-industrialised nations on energy policy. The other
most-watched oil forecasters, including the Organisation of Petroleum
Exporting Countries and the U.S. Energy Information Agency expect world
oil demand to rise by about 1.4 million barrels per day in 2011.