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High price of oil is 'hitting energy demand', IEA says | High price of oil is 'hitting energy demand', IEA says |
(40 minutes later) | |
The high price of oil is beginning to effect demand for energy, according to the International Energy Agency (IEA). | The high price of oil is beginning to effect demand for energy, according to the International Energy Agency (IEA). |
"The growth in world oil demand is showing signs of slowing over the last few months, affected by very high prices," the IEA said. | "The growth in world oil demand is showing signs of slowing over the last few months, affected by very high prices," the IEA said. |
The agency kept its 2011 global oil demand growth forecast unchanged at 1.6%, or 1.4 million barrels per day, however. | The agency kept its 2011 global oil demand growth forecast unchanged at 1.6%, or 1.4 million barrels per day, however. |
The IEA also said it was concerned about supply shortages. | The IEA also said it was concerned about supply shortages. |
Global oil output fell by around 700,000 barrels per day in March due to unrest in Libya, the IEA said. | Global oil output fell by around 700,000 barrels per day in March due to unrest in Libya, the IEA said. |
"Hypothetically, if global supply were to chug along at March levels for the rest of 2011, OECD inventory could slip to near five-year lows by December," it said. | "Hypothetically, if global supply were to chug along at March levels for the rest of 2011, OECD inventory could slip to near five-year lows by December," it said. |
The oil price fell sharply after the International Monetary Fund said on Monday that the high price of oil was a major risk to global economic recovery. | The oil price fell sharply after the International Monetary Fund said on Monday that the high price of oil was a major risk to global economic recovery. |
US investment bank Goldman Sachs also warned that consumers in the US were starting to conserve energy because of high oil prices. | US investment bank Goldman Sachs also warned that consumers in the US were starting to conserve energy because of high oil prices. |
On Tuesday, Brent crude was $124.45 a barrel at the start of London trading, having hit $124.57 earlier. US light, sweet crude stood at $109.81 a barrel. | On Tuesday, Brent crude was $124.45 a barrel at the start of London trading, having hit $124.57 earlier. US light, sweet crude stood at $109.81 a barrel. |
Less palatable | Less palatable |
The price of oil could begin to moderate itself over time, the IEA suggested, although a policy response from Opec was unlikely. | The price of oil could begin to moderate itself over time, the IEA suggested, although a policy response from Opec was unlikely. |
"That leaves a less palatable route to price moderation - namely economic slow-down and weaker demand growth," it said. | "That leaves a less palatable route to price moderation - namely economic slow-down and weaker demand growth," it said. |
Despite early signs of demand destruction, it was too early to predict the end of high oil prices, the EIA said. | |
"It's difficult to see where is the high water mark for political unrest," said David Fyfe, head of the IEA's oil industry division said. | |
"Arguably some of this uncertainty in the Middle East-North Africa region has a while further to run." | |
However other analysts suggested that the data in the IEA's report could be interpreted in a positive light. | However other analysts suggested that the data in the IEA's report could be interpreted in a positive light. |
"The report is not as bad as expected in the sense that while they talk about potential demand destruction, they have not changed their numbers," Petromatrix analyst Olivier Jakob said. | "The report is not as bad as expected in the sense that while they talk about potential demand destruction, they have not changed their numbers," Petromatrix analyst Olivier Jakob said. |