The International Energy Agency Friday shaved its forecast for global oil consumption, citing the slowdown in world economic growth.
The IEA said it expects oil consumption to rise a relatively meager 800,000 barrels a day, or 0.9 percent, in 2012, according to its latest monthly market report. That would be 300,000 barrels a day less than the IEA forecast just a month ago.
The agency said that oil consumption would fall 0.8 percent in the industrialized nations in the Organization of Economic Cooperation and Development, while consumption would rise by 2.8 percent in developing nations.
The revised forecast for oil is a result of lower expectations for world economic growth, now expected to be 3.3 percent this year, down from earlier forecasts of 4 percent.
The IEA said that weak demand was “providing a ceiling for otherwise stubbornly high crude prices.” But it added that as a result of tightening of U.S. and European sanctions on Iranian oil exports, “perceptions of impending supply issues are clearly placing a floor under oil prices for now.”
On the supply side, the IEA said that oil production outside the Organization of Petroleum Exporting Countries fell slightly by 200,000 barrels a day to 53.2 million barrels a day in January as a result of lower global biofuels output, violence in Syria, conflict in southern Sudan and outages in the North Sea. But that was offset by higher output in North America and a slight increase in OPEC crude supply as a result of the ramp up in Libyan production and high output levels in Saudi Arabia and the United Arab Emirates.
Inventories in OECD countries declined in December and remained below the five-year average for a sixth consecutive month, the IEA added.