PARIS -- World oil demand is growing more slowly than expected as
Asia's year-long economic crisis saps the region's once robust
for energy and producers struggle to cut output, the International
Energy Agency said.
The IEA cut its forecast of daily world demand by 100,000 barrels
to 75 million. While consumption is expected to rise from 73.8
million a day last year, the agency's forecast for 1998 is down
almost 1 percent from 75.6 million just six months ago.
Oil prices are down more than 20 percent in the past year to less
than $14 a barrel and could be headed lower unless producers slash
output. So far, the glut has survived even after supply was cut by
more than 2 percent in April.
The IEA's forecast of weaker growth "paints a grim picture for
demand," said Peter Gignoux, head of oil trading at Salomon Smith
Barney in London.
Koreans have cut energy use, Japanese power plants are burning
less oil and China's growth could slow, the Paris-based agency said.
That will reduce demand in several Asian countries that in recent
years were among the fastest growing energy users.
The IEA, which was set up during the energy crisis of the 1970s to
monitor supply and demand for the 23-nation Organization for
Cooperation and Development, said oil demand is growing more slowly
as Asian demand, excluding China, declines.
Brent crude oil futures fell as much as 55 cents, or 4 percent, to
$13.67 a barrel on the International Petroleum Exchange.
Compounding the demand problem is rising supply, particularly from
the Organization of Petroleum Exporting Countries. Based on IEA
forecasts for non-OPEC supply and Bloomberg estimates of current
production, the world will be pumping about 77 million barrels a day
by the fourth quarter.
Demand from Asia, excluding China, Japan and South Korea, will be
9 million barrels a day this year, down 100,000 from last year and
100,000 less than the IEA's forecast last month. Japan, South Korea,
Australia and New Zealand will consume a total of 6.6 million
a day, down from 6.7 million last year.
"On the demand side, we were expecting too much from Asia,
especially Korea and Indonesia," said Gareth Lewis-Davis, an analyst
at the IEA. And it could get even worse.
Tumbling currencies in many Asian nations have increased the cost
of importing dollar-priced oil and refined products, and slumping
economies reduce consumption of energy needed to run factories,
plants and automobiles. …