Oil Demand Forecast Cut - Wall Street Journal

By SPENCER SWARTZ LONDON -- The International Energy Agency made a large cut to its medium-term forecast for total world oil demand, suggesting the impact of recession and energy-efficiency efforts may help check future increases in the price of crude oil.

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The Paris-based IEA said in a report it expects global oil demand by 2013 to average 87.90 million barrels a day, down 3.7%, or 3.35 million barrels a day, from its December forecast. The latest projection is a massive 6.24 million barrels a day, or almost 7%, below the IEA's 2008-13 forecast issued in July. But the report also highlights how reduced investment and other "above ground" factors -- such as the practice of reserving the best blocks for national oil companies -- are hurting supply. That could mean much higher crude prices down the road if economic growth quickly returns to rates of more than 3%.

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