As expected, the IEA [International Energy Agency] cut slightly its forecast for annual oil demand growth, but surprised the market with a deep reduction in its forecast for supply growth from non-Opec nations, leaving the world more dependent on the producers\u2019 cartel.<\/p>\n
It cut its demand growth forecast further by 80,000 b\/d to an annual increase of 800,000 b\/d because of record high prices, the slowing US economy and the partial removal of fuel subsidies in some Asian countries.<\/p>\n
However, the agency warned that so far, there were \u201cvery few signs of slowing demand in non-OECD countries where economic growth is far more significant than price in determining demand\u201d\u009d.<\/p>\n
The cut in the IEA\u2019s forecast for oil demand growth was overshadowed by a larger cut in forecast supplies. The agency cut its forecast for non-Opec supply growth to just 455,000 b\/d, or 225,000 b\/d below last month\u2019s forecast. It expected most of the non-Opec fresh output to be in the form of biofuels, which would account for 72 per cent of the supply increase.<\/p>\n
The non-Opec supply growth forecast for 2008 is now below the growth achieved by the group both in 2007 and 2006, in spite of significantly higher oil prices.<\/p>\n