October 12, 2002	Saturday	Sha'aban 5, 1423

LONDON, Oct 11: World oil demand growth is stalling, hit by a deceleration in the global economic recovery, the International Energy Agency said on Friday.

Cutting its world demand growth forecasts, the Paris-based IEA said continued high oil prices also were dampening incremental consumption among manufacturers and heavy industry. “The cut reflects the slowdown of the US and global economic recovery, the impact of high oil prices on oil consumption and the broader economy,” the IEA said in its Monthly Oil Market Report.

The agency, adviser on energy to 26 industrialized nations, sliced its forecast for world oil demand growth next year to 1.04 million barrels a day, cutting 100,000 bpd for a projection of 77.68 million.

It also shaved its forecast for demand growth this year by 50,000 to 170,000 bpd. It sees total demand in 2002 of 76.64 million bpd.

While the United States recorded growth in August, the IEA said consumption contracted in all other leading OECD industrialized economies, with particularly sharp falls in Japan and Germany.

The outlook for Japanese demand would be even worse if it were not for a series of nuclear power plant outages.

The shutdowns will mean an average 85,000 bpd of oil demand from Japanese power generators in the fourth quarter, the IEA said, after admissions from several utilities that they failed to report cracks at nuclear reactors.

While world demand growth slows, supplies from Opec are roaring ahead, despite the group’s September decision to leave official quota limits unchanged.

Cartel countries bound by output quotas boosted production by 430,000 bpd in September to pump 2.2 million bpd more than official quotas, the IEA estimated.

Increases came from Algeria, Saudi Arabia, Iran, Venezuela and Nigeria. Sanctions-bound Iraq also lifted exports, carrying total Opec crude supply up 780,000 bpd in September to 25.75 million.

Assuming Opec output remains steady at those levels for the next six months, over the winter period to end-March 2003, IEA data indicates Opec supplies will mean no winter stock draw.

Usually world oil inventories are drawn down during the winter months and built up again during the northern hemisphere spring and summer.

But the IEA’s projection for the call on Opec crude over the six months to end-March of 25.8 million bpd indicates the cartel is pumping enough to prevent any stock draw this winter.

Recent data from the United States has shown crude stocks falling sharply.

But latest IEA data for commercial inventories among all OECD nations showed stocks eased only 12 million barrels in August, remaining six million higher than at the same time last year.—Reuters