The International Energy Agency (IEA) said Wednesday that it has revised down its oil demand estimates for 2012 as the global economic recovery stalls.
The IEA has cut its forecast for 2011, from a growth of 3.9 percent to 3.8 percent, and reduced its forecast for 2012 from a growth of 4.2 percent down to 3.9 percent. It was the second consecutive month the IEA reduced its forecast.
“Demand has continued to run ahead of supply by an average of 0.6 million barrels a day so far in 2011,” IEA said in its monthly report.
The Paris-based agency said that in 2012, demand for oil will decline by 210,000 barrels per day.
The international agency said that OPEC has recently reduced its oil supply output. “Libya’s return to the global market may have already set in motion a rebalancing of production flows for several OPEC member countries, which stepped in to fill the breach after hostilities broke out last February,” IEA said in its report. The agency said that Saudi Arabia is also cutting down supply.
Officials from OPEC this week said that the sovereign debt crisis roiling Europe is cause for concern, increasing volatility in oil prices.
Oil prices, both for the North Sea Brent and American Light Crude have fallen this year, as economic activities slow due to a slowing global economy. Emerging markets activity usually drives growth, but many emerging market countries have scaled back on growth.
IEA Executive David Fyfe said that there is “still robust growth but it’s being affected by this economic slowdown” in an interview with Bloomberg Television Wednesday.
However, oil-producing nations are expected to meet lowered demand with lower supply, and the IEA does not expect an imbalance in supply and demand.
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