Record oil prices denting demand

LONDON – World oil demand will grow more slowly than expected in the fourth quarter as record-high oil prices prompt some consumers to seek alternatives, the International Energy Agency said yesterday.

The IEA, adviser to industrialised countries, said in its monthly Oil Market Report demand will rise by 2,03 million barrels per day in the fourth quarter from a year ago, 320 000 bpd less than previously expected. “There has been a bit of substitution going on, natural gas for oil, which is essentially a price effect,” Lawrence Eagles, head of the IEA’s Oil Industry and Markets Division, told Reuters.”There have also been some small downward adjustments to economic growth, which have also played a role.”The cut in fourth-quarter demand follows a similar move by the IEA last month and points to a slightly lower need for oil from the Organisation of the Petroleum Exporting Countries in the final months of 2007.TIGHTER SUPPLY SEEN Opec is set to raise output in November, a move that followed months of pressure from the Paris-based IEA which has been worried about the impact of record oil prices above US$80 a barrel on consumers.The IEA trimmed its assumptions about economic growth “slightly” ahead of new forecasts from the International Monetary Fund and other organisations in the wake of the US subprime mortgage crisis.According to a report from Italian news agency ANSA on Monday, the IMF’s World Economic Outlook, to be issued next week, will cut its forecast for world growth next year to 4,8 per cent from 5,2 per cent.Oil prices pared an earlier gain after the IEA report was released and later steadied.US crude was up 32 cents at US$81,62 a barrel.Nampa-Reuters”There has been a bit of substitution going on, natural gas for oil, which is essentially a price effect,” Lawrence Eagles, head of the IEA’s Oil Industry and Markets Division, told Reuters.”There have also been some small downward adjustments to economic growth, which have also played a role.”The cut in fourth-quarter demand follows a similar move by the IEA last month and points to a slightly lower need for oil from the Organisation of the Petroleum Exporting Countries in the final months of 2007.TIGHTER SUPPLY SEEN Opec is set to raise output in November, a move that followed months of pressure from the Paris-based IEA which has been worried about the impact of record oil prices above US$80 a barrel on consumers.The IEA trimmed its assumptions about economic growth “slightly” ahead of new forecasts from the International Monetary Fund and other organisations in the wake of the US subprime mortgage crisis.According to a report from Italian news agency ANSA on Monday, the IMF’s World Economic Outlook, to be issued next week, will cut its forecast for world growth next year to 4,8 per cent from 5,2 per cent.Oil prices pared an earlier gain after the IEA report was released and later steadied.US crude was up 32 cents at US$81,62 a barrel.Nampa-Reuters