LONDON: World oil demand will dive by a hefty 2.4 million barrels per day (bpd) in 2009, the International Energy Agency (IEA) said yesterday, citing the impact of prolonged economic recession on energy use.
As the rate of contraction in oil consumption reached levels last seen in the early 1980s, it said outright demand for this year was expected to be 83.4 million bpd, around one million bpd less than in its previous monthly report.
“This is a pretty exceptional period of demand collapsing,” said David Fyfe, head of the oil industry and markets division at the IEA, the Paris-based adviser to oil-consuming countries.
He could not say whether there would be further downward revisions. “I think everyone out there is trying to gauge when the recession is going to bottom out. We can’t say definitively that global GDP is not going to worsen,” he said.
As demand has disappeared, stocks have swollen in developed countries and equated to 61.6 days of forward demand cover in February, a measure closely watched by the Organization of the Petroleum Exporting Countries (OPEC), which considers around 52 days comfortable.
The IEA said current forward cover was the highest since 1993, although it added “absolute stock levels” arguably provided a more representative view of the market because the demand figure has been cut so deeply.
The OPEC has agreed to reduce supply by 4.2 million bpd since September. In last month’s report, the IEA had said strict adherence with OPEC supply cuts already in place would shrink oil stocks in developed nations by around the middle of the year.
But Fyfe said the “reality check” of the first quarter — and its lower demand than previously expected — meant it would take longer for OPEC to balance the market, even assuming strict compliance.
“We would probably (now) say it would take them until the end of the year,” he said.
