Commodity Online
PARIS: Markets in turmoil mean weak demand for oil. The International Energy Agency (IEA) on Friday cut its oil demand growth forecast for 2008 to its lowest rate in percentage terms since 1993, citing economic weakness and "a spiralling liquidity crisis."

IEA reduced its 2008 growth forecast by 250,000 barrels per day (bpd) compared with its previous monthly report to 440,000 bpd and lowered its 2009 prediction by 190,000 bpd to 690,000 bpd.

The Paris-based agency, which represents 28 industrialised nations, has so far pared around half a million bpd from its 2008 global demand estimate and 400,000 bpd from its 2009 estimate.

The impact of global economic weakness is most acute in developed countries and developing economies are showing "a degree of resilience," it said.

"Although non-OECD slow-down is also likely, it is by no means certain that growth will be choked off altogether. We have yet to see unambiguous evidence of a sharp slow-down in China, while Middle Eastern demand growth remains robust."

But the IEA cautioned against too much focus on demand and said the credit crisis was also impacting supply, which could at some stage support oil prices.

"Credit shortages are rapidly becoming yet another in a long line of impediments to industry investment," it said.

Non-OPEC net output growth has been almost wiped out for this year to an average of only 150,000 bpd.

The IEA said the impact of OPEC's decision in September to agree strictly to its output targets had so far reduced its output by 300,000 bpd to 32.3 million bpd last month.

The group has called an extra emergency meeting on Nov. 18 in Vienna to reassess the oil market in the light of global financial turmoil.