Page last updated at 10:47 GMT, Friday, 16 January 2009

Oil demand to fall again in 2009

Oil worker in Bahrain
Opec announced a cut in oil production last month

Global oil demand is due to fall for the second year in succession in 2009, the first consecutive annual declines in 26 years, a report has predicted.

Demand will decline this year by an average 940,000 barrels per day to 85.3 million, a 0.6% fall from 2008, said the International Energy Agency (IEA).

The IEA, which represents the main oil consuming nations, said the expected fall was due to the global slowdown.

It said the world economy will now grow 1.2% in 2009, half its past estimate.

'Alarming fall'

The IEA had previously predicted that global oil consumption would recover slightly this year, after 2008's 0.3% fall, led by demand in the developing world.

It now warns that demand will also cool, particularly in China, where the rate of Chinese economic growth will slow to 6.5%, its weakest level in eight years.

The IEA report comes a month after oil producers' cartel Opec announced a record cut in output, as it aimed to shore up prices that have fallen sharply since record highs last summer.

"Global oil demand is reducing at an alarming rate," said Rob Laughlin, senior oil analyst at MF Global in London.

"This latest report from the IEA is another warning shot across the bows to OPEC that supply is still outpacing demand and the situation is getting worse seemingly day by day."

US light crude was trading down 30 cents to $35.10 a barrel on Friday morning. Last July it hit a record $147.

Brent crude was up seven cents to $47.75.

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