Global oil demand growth in 2005 is proving slower than expected because of lower-than-expected consumption rates in China and the United States, the International Energy Agency said today.
The IEA, adviser on energy to 26 industrialised nations, in a monthly report, revised down its forecast for global oil demand growth this year by 200,000 barrels a day to 1.58 million bpd, 1.9 per cent.
The reduced demand forecast comes with oil at record prices of more than $61 a barrel for benchmark US crude.
The latest surge was blamed on renewed fears of supply disruptions at US offshore oil facilities as another major storm brewed over the Caribbean.
The IEA's forecast for growth in China's demand was lowered by 100,000 bpd to 360,000 bpd, 5.5 per cent.
"China's price restrictions on transport fuels and power are making it uneconomic for domestic refiners and utilities to maximise output, therefore inhibiting demand," the IEA said.
The agency said the China forecast assumed a rebound in growth in the second half of 2005 to 9.4 percent, after a 1 per cent fall in the second quarter and 4.3 percent growth in the first quarter.
Chinese demand jumped by 15.4 per cent in 2004. For 2006, the IEA said growth in oil consumption for China was expected to rise by 7.2 per cent, adding 490,000 bpd of demand.
In its first forecast for next year, the IEA also sees world demand increasing by 1.75 million bpd, a 2.1-per cent growth rate, to 85.62 million bpd. That is slightly faster than the 1.9 percent forecast for this year but down from 2004's 3.6 per cent growth when demand rose by 2.9 million bpd.