London: The world’s top energy forecasters are likely in the coming days to reduce again their projections for world oil use this year, after big revisions in assumptions about global growth, but these cuts may be the last.
The three top forecasters - the International Energy Agency (IEA), the Organization of the Petroleum Exporting Countries (Opec) and the US Energy Information Administration (EIA) - will publish new oil supply and demand estimates between 10 April and 15.
Their forecasts are followed closely by investors in oil markets, which have seen prices tumble to around $50 per barrel this week from highs of almost $150 in July last year.
All three bodies pay close attention to growth forecasts by the International Monetary Fund, which two weeks ago revised down sharply its expectations for global gross domestic product.
The IMF now says the global economy will shrink as much as 1 percent this year - its first contraction since World War Two - after previously forecasting world growth of 0.5%.
The previous IMF projection of modest global growth was only published in January and analysts say the latest IMF revision is likely to cascade through almost all official energy forecasts.
World oil demand is falling for the first time in a generation as the deep global downturn closes factories and brings unemployment to the world’s largest economies.
Room for more cuts
“All the energy agencies are basing their forecasts on global GDP growth, and if they are doing that, there is room for more cuts in global demand,” said David Wech, head of energy studies at analysts JBC Energy in Vienna.
The IEA will be the first of the big forecasters to publish its monthly report, in which it issues supply and demand data. Adviser to 28 developed countries, the IEA said last month it expected world oil demand to decline 1.25 million barrels per day (bpd) this year, taking it down to 84.4 million bpd.
IEA Executive Director Nobuo Tanaka said on 2 April the agency was likely to lower its global oil demand forecasts:
“The possibility for downward revision will be high,” Tanaka said. “The possible downward revision could be significant.”
Opec is due to release its monthly report on 15 April and it too will almost certainly slash oil demand forecasts. Its last report saw demand dropping by 1.01 million bpd in 2009.
The EIA reports on 14 April. Analysts say it is less likely to cut its demand projections because they are already below some others, seeing a fall of 1.38 million bpd in demand this year.
Mike Wittner, oil research head at Societe Generale, projects global oil demand will fall by 1.5 million bpd in 2009.
But many analysts think oil use may recover later this year and say demand estimates may have to be revised back up again.
Leo Drollas, chief economist at the Centre for Global Energy Studies, says some data suggest US gasoline demand is rising as pump prices have halved over the last nine months.