According to the International Energy Agency, faltering economic growth will undercut global oil demand this year and next.

The IEA said that sluggish economic growth could restrict annual oil demand growth to 0.9 million barrels per day in 2012 and 0.8 million barrels per day in 2013 with demand averaging 89.6 million barrels per day and 90.5 million barrels per day down from last month's estimates of 89.9 million barrels per day and 90.9 million barrels per day respectively.

The IEA highlighted slower demand in the United States and China, which together account for a third of the global market while technical changes in its calculations also cut its 2012 forecast by 0.25 million barrels per day. The IEA, set up to advise developed countries on energy policy, reduced its 2013 economic growth forecast to 3.6% from 3.8% but left its 2012 estimate unchanged at 3.3%.

The Chinese economy which has driven demand for oil and other commodities for the past 20 years was likely to grow 8.0% this year instead of 8.2% rising marginally to 8.1% in 2013 rather than 8.5%.

Chinese data this week bears out that picture with the government expected to announce fresh stimulus measures to keep growth at around 8.0% the minimum necessary to provide enough new jobs to keep unemployment at bay.

Source - AFP

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