IEA lowers oil demand growth forcast for 2006

IEA Warns Of Weaker Oil Demand On High Prices

By Spencer Swartz

LONDON (Dow Jones)--The rate of global oil demand growth is expected to be weaker this year, the International Energy Agency warned Tuesday, in a report pointing to the impact of oil prices on consumers and industrial users, especially in parts of Asia.
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"I believe (the report) indicates that 4.5%-5.0% gross domestic product growth rate forecasts look too high, and it makes it harder to justify support for $60 oil," McMahon said.
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In its widely-watched monthly report, the Paris-based IEA cut its oil demand growth forecast for 2006 by 16% to 1.49 million barrels a day from 1.78 million b/d a month earlier.
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The new forecast is bound to unnerve the Organization of Petroleum Exporting Countries just days after the 11-nation producer group decided unanimously to maintain its quota production ceiling at a 25-year high. (emphasis mine)

Source-Yahoo

Supply and demand at work. Now, don't get to excited over this one. This doesn't mean we are consuming less oil than last year, it means that the growth of our oil consumption will actually be less than expected. That said, it's a good thing. Sort of. It's good to see the world tightening it's belt as far as oil goes (People driving less, switching to other modes of transportation, etc, not quitting oil altogether). There's a slight bit of worry for me that this may be the end of 2.30,2.50 gas. If the world isn't going to use as much, and OPEC is still pumping at a 25 year high, supply exceeds demand, prices drop, and that SUV looks cool again.
(Reality)
Unless that's what OPEC wants, a possibility, they will meet as soon as this situation stabilizes and again shift their production schedules to gain an equilibrium with the market. Personally, I hope this isn't the end, or even the forbearer, of expensive oil.

opec really doesn't want prices to fall below $50. even with the high prices last year the economy wasn't hurt as bad as it would have been in the early 80's.

you may see opec on paper cut production

Originally posted by bigx01
opec really doesn't want prices to fall below $50. even with the high prices last year the economy wasn't hurt as bad as it would have been in the early 80's.

you may see opec on paper cut production

OPEC has said quite clearly that it is willing to work with prices in the low 30 USD range. OPEC has almost no control over global oil prices and they are obviously not going to object more strongly than they have to when prices goes up like this. If they do not have to pay for the suppression of alternative energy sources or actively manipulate the market to raise oil prices we really can not expect them to protest when it goes up.

It's sad that so many uninformed people blame even this on the Arabs...

Stellar