World oil demand will grow less quickly than expected this year because of slower economic growth in the United States, the International Energy Agency said on Wednesday. The IEA, adviser to 27 industrialised countries, forecast in its monthly Oil Market Report that world oil demand growth would average 1.67 million barrels per day (bpd), down 310,000 bpd from its previous estimate.
"It's a big shift in demand growth," said Lawrence Eagles, head of the IEA's Oil Industry and Markets division. "A little bit of that is due to higher demand in 2007, but the biggest chunk is because of weaker economic growth, mainly in the developed economies and particularly the United States."
The reduction follows a lower growth forecast from the International Monetary Fund, which last month cut its global 2008 growth projection to 4.1 percent, a marked slowdown from last year's 4.9 percent pace.
Economic slowdown in the US - the world's top oil consumer - will be significant and will last for some time, IMF Managing Director Dominique Strauss-Kahn said on Monday.
While oil demand is slowing, risks to supply from Nigeria to Venezuela have helped prices rise to around $93 a barrel from a dip towards $86 last month. The IEA said inventories are low and need to rise. In the latest supply threat, Venezuela stopped oil exports to Exxon Mobil Corp on Tuesday, escalating a fight with the US company.
"Although stocks have recovered in January, they remain low," the IEA said. "There is clearly, despite demand side risks, the need to rebuild stocks." Oil edged lower after the report was released and later moved higher. Crude was up 30 cents at $93.08 a barrel at 1022 GMT. Prices are down from a record high of $100.09 hit last month.