Oil Consumption Projected To Fall Sharply in '09

Paris, France, May 14, 2009--Oil consumption is projected to fall this year at the fastest pace since 1981 due to the world economies, the International Energy Agency said Thursday as it made new cuts to its forecast for crude demand.

In its closely watched monthly survey, the Paris-based agency said it now expects global oil demand to fall 3 percent to 83.2 million barrels a day this year, or 2.6 million barrels a day less than in 2008. It was the ninth consecutive monthly cut that the IEA has made to its oil demand forecast.

The estimate represents a slight cut to its last forecast of a 2.8 percent drop in demand this year, and comes on top of a 0.3 percent fall in crude consumption last year. It will be the first time oil demand has fallen for two consecutive years since 1982-1983.

Oil prices have jumped from near $50 a barrel earlier this month -- and rose above $60 earlier this week -- on hopes that the worst of the recession is over in the U.S., the world's biggest oil consumer.

But figures released Wednesday showed that U.S. retail sales unexpectedly fell in April, and the American housing market also continues to struggle.

"New bullish macroeconomic sentiment has not yet produced signs of oil demand recovery and oil market fundamentals remain weak," the IEA said. The agency said its forecast is premised on economic recovery "remaining elusive" this year.

Benchmark crude for June delivery was down 88 cents to $57.16 a barrel by late afternoon in Singapore, in electronic trading on the New York Mercantile Exchange.