The International Energy Agency may reduce its world oil demand forecast for 2012 this week due to a weaker outlook for the world economy, even though some evidence points to stronger consumption in the latter part of the year.

All three of the most closely watched monthly oil forecasts from the US government's Energy Information Administration and producer group the Organization of the Petroleum Exporting Countries are due for release this week.

Since their January forecasts, the International Monetary Fund on January 24th 2012 reduced its estimate for world economic growth to 3.3% from 4% saying the outlook had deteriorated in most regions. That has a bearing on the Paris based IEA's oil demand projections as the agency says it relies extensively but not exclusively on IMF economic estimates in forecasting world demand.

The IEA's last monthly report said that oil demand was falling for the first time since the global economic crisis of 2008 to 2009. The IEA reduced its 2012 demand growth forecast by 220,000 barrels per day to 1.1 million barrels per day.

Mr Olivier Jakob oil analyst at Petromatrix in Zug, Switzerland said that “I expect the IEA to cut 2012 demand by about 0.3 million barrels per day. Downward revisions need to come due to the IMF having lowered its world GDP forecast and the IEA moves in line with the IMF numbers.”

Mr Jan Stuart head of energy research at Credit Suisse also thought a downward demand revision was on the cards, even though evidence was pointing the other way. I expect to see IEA and OPEC to revise down estimates for 2012 demand wrongly. I think what they are going to do is take revised downward revisions of global GDP as their principal guide,' he said. 'We think that more recent indicators and signals and data points show that in fact a global recovery is gaining pace and not de-accelerating.’

(Sourced from www.tradearabia.com)