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PREVIEW-Global oil demand forecasts may have hit bottom

Published 05/11/2009, 06:30 AM
Updated 05/11/2009, 06:40 AM
BARC
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* EIA issues Short-Term Energy Outlook May 12

* OPEC Monthly Oil Market Report due May 13

* IEA publishes monthly Oil Market Report May 14

* Forecasts for 2009 oil consumption likely to be maintained

By Christopher Johnson

LONDON, May 11 (Reuters) - Global oil demand estimates this year by the world's top energy forecasters may have hit bottom following a series of recent cuts and as prospects for the world economy appear to be brightening, industry analysts say.

The top three energy forecasters, the International Energy Agency (IEA), the Organization of the Petroleum Exporting Countries (OPEC) and the U.S. Energy Information Administration (EIA) all issue monthly oil reports this week.

As the global recession has deepened, these reports have repeatedly lowered their demand forecasts. Most recently, they predicted a decline in oil consumption this year of between 1.4 and 2.4 million barrels per day (bpd) from 2008, after earlier forecasts of modest increases in oil use.

But over the last few weeks, economic data from the United States, the world's biggest oil consumer, has suggested improved prospects for growth.

"Everyone will be looking at these reports for their estimates of global oil demand, but I don't think there is much chance of more downgrades," said Amrita Sen oil and commodities analyst at Barclays Capital in London.

"It is really difficult to see the IEA in particular revising downwards its estimates for oil demand any further."

DEEPEST CONTRACTION SINCE WW2

The IEA, adviser to 28 industrialised countries, said in its report in April that world oil demand would slide by 2.4 million bpd in 2009 to around 83.4 million bpd, a cut of more than 1 million bpd from its previous forecast in March.

The IEA estimate of 2009 oil demand is now significantly below predictions by most other forecasters and reflects an extremely negative outlook for world economic growth with an assumption that global output will fall by 1.4 percent.

This is even steeper than the official forecast by the International Monetary Fund, which sees the deepest economic contraction since World War Two with a decline of 1.3 percent. [ID:nN21500818]

By contrast, the EIA's estimate of 2009 oil demand published last month is for a year-on-year fall of 1.36 million bpd.

In its April Monthly Oil Market Report, OPEC said oil demand would drop by 1.37 million barrels per day (bpd).

Comparisons of oil demand estimates are difficult because there is little agreement even on historical consumption.

The IEA estimated 2008 global oil demand at 85.8 million bpd, while OPEC saw it at 85.6 million and the EIA thought it was 85.5 million. Estimates now for 2009 oil demand range from OPEC at 84.2 million bpd down to the IEA at 83.4 million. [ID:nLT230256]

Reuters' poll of analysts on April 29, produced an average estimate of oil demand at close to 84.1 million bpd this year.

But there have been few hints of any further cuts in demand estimates and head of the IEA, Nobuo Tanaka, said last month that the agency was unlikely to cut again soon.

Data on Friday suggested U.S. unemployment was beginning to increase at a slower rate, some Chinese data have been encouraging and some measures of U.S. consumer confidence have hinted at a brightening outlook later this year.

"Assumptions about the severity of the economic downturn seem to have steadied," said Simon Wardell, senior energy analyst at IHS Global Insight. "OPEC may adjust down its demand forecast but I don't expect to see much change from the IEA." (Reporting by Christopher Johnson; editing by Keiron Henderson)

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