Costly oil slows demand growth, eases Opec load: IEA

Record oil prices are braking growth in fuel use in the United States, the world's biggest consumer, and easing Opec's supply task this year, the International Energy Agency said on Friday.
Despite pumping full blast, the Organisation of the Petroleum Exporting Countries has failed to curb prices that have shot beyond $70 on fears of supply disruptions in major producers Iran and Nigeria.
But mild winter temperatures, weaker demand in the Former Soviet Union and slower growth in US energy use may reduce the need for the producer group's oil, the energy adviser to 26 industrialised countries said in its monthly report.
"It's becoming increasingly clear that the price is having quite a strong effect on demand growth," said Lawrence Eagles, head of the IEA's Oil Industry and Markets Division.
The Paris-based agency cut its 2006 forecast for demand growth by 220,000 barrels per day (bpd) to 1.25 million bpd and lowered the world's requirement for Opec oil by 200,000 bpd to 29.2 million bpd for the year.
Global oil demand grew by only 370,000 bpd year-on-year in the first quarter, but is expected to rebound in the second half of the year, said the report.
Impressive US economic growth of 4.8 percent in the first three months of 2006 was set against less than stellar growth in oil consumption.
"In fact, year-on-year demand growth was weaker in the first quarter than in the hurricane-impacted fourth quarter of 2005 when the economy grew by only 1.7 percent," the report said.
A weaker performance was also turned in by the FSU, where the IEA trimmed apparent demand - crude output less net crude and product exports - by some 100,000 bpd for 2006 because of unexpectedly strong exports.
CAPACITY CRUNCH:
While global oil demand growth is barely a quarter of the four percent hit in 2004 when China and the United States fuelled explosive demand, oil prices have doubled as Opec and others struggle to keep pace.
Producer nations have, however, managed to supply world markets with 85.1 million bpd in April - an increase of 485,000 bpd on the previous month, the IEA said. For its part, Opec pumped 30 million - up 170,000 bpd on March.
But the 11-member group still has not built up enough spare capacity. The IEA pegs its "effective spare capacity" - excluding Iraq, Nigeria, Venezuela and Indonesia which have production problems - at close to 1.7 million bpd.