International Energy Agency Cuts Forecast For Oil Demand

by Darren

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Oil just keeps on going up in price, which should cause consumers to buy less. But with something as important as transportation fuel, even a lessening in demand won’t automatically create a price cut. At least that’s what the International Energy Agency seems to be saying.

“Supply growth so far this year has been poor and higher prices are needed to choke off demand to balance the market,” they wrote in their Annual report.

Right now, global demand for oil is 86.8 million barrels barrels per day. But the IEA thinks there will be a contraction in 2008 of 2.5 percent this year to 20.3 million barrels a day.

The Airline Industry has already announced that they would be offering fewer flights, which will reduce oil consumption. Statements from consumer groups and business owners indicate demand for oil could drop even further than expected.

It’s up to investors to decide if the “oil bubble” is about to burst, of if increased demand from India and China for petroleum will continue to push oil prices to unthinkable highs. Energy stocks and funds promise to be very active in the last half of 2008.

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