IEA sees global oil demand to recede

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The International Energy Agency (IEA) cut its global oil demand growth forecast for this year, due to persistent high oil prices and lower growth projections for developed economies.

The energy advisor to industrialised nations warned in its monthly oil market report that high prices could dent the fragile economic recovery.

"We clearly have seen demand growth slowing compared to last year's level and we're seeing it very much concentrated where the price feed through is most direct, notably in North America in terms of gasoline," said David Fyfe, head of the IEA's Oil Industry and Markets division.

Preliminary March data showed a marked slowdown in global oil demand, the agency said, although the data could be distorted by the devastating earthquake in Japan and the Easter holiday period.

"Persistently high prices at this stage of the economic cycle may ultimately sow the seeds of their own destruction. Until then, the market confronts fundamentals that still look likely to tighten in the second half of 2011," the IEA report said.

OPEC's supply of crude fell by 0.235mn bpd in April to 28.75mn bpd, due to lost Libyan output.

"Despite expectations that OPEC would increase output to replace lost Libyan supplies, the group's production is now running 1.3 million bpd below the pre-Libya crisis level of 30.1 million bpd posted in January," the report said.

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