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As the global recession deepens, the agencies which prognosticate about future demand for oil are starting to back off on optimistic projections for 2009. The IEA which had been predicting an actual increase in the demand for oil in 2009 now says that production will fall by 0.6 percent or 500,000 b/d during the year. This estimate is based on the International Monetary Fund’s projection that the world economy will now grow by only 1.2 percent this year as opposed to its November estimate of 2.1 percent. The IEA now projects that Chinese demand for oil this year will still grow, but at only 1.1 percent for an increase of 320,000 b/d.
The US’s EIA however is more pessimistic seeing worldwide demand drop by 800,000 b/d during 2009 and then rebounding in 2010 when economic recovery is projected to begin. The OPEC secretariat is more optimistic than either the EIA or the IEA. They are estimating that total world demand for oil will only fall by 180,000 b/d this year.
There clearly is a major disconnect between the “official” estimates of only modest declines in demand and the popular perception, backed up by falling oil prices and growth in stockpiles, that the demand for oil is dropping rapidly. OPEC is believed to already have cut production by 2 million b/d from summer highs and appears to be in the process of cutting by at least an additional 2 million b/d. Yet the IEA says that global production was flat in December at 86.2 million b/d with OPEC production cuts offset by gains elsewhere.