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The world economy will consume in the next five years far less oil than previously assumed, the western countries' energy watchdog said on Friday in a further sign of the impact of the global economic crisis on commodities markets.
The new International Energy Agency forecast came as oil prices on Friday fell to a four-year low of $40.85 a barrel, down more than $2 on the day. Oil prices had suffered their worst week since January 1991, losing more than $12 in five days.
The IEA lowered its forecast for 2008-2013 annual oil consumption growth to 1.2 per cent per year - or about 1.0m barrels a day - down from the 1.5m b/d it forecast last summer. The watchdog expects oil demand in 2013 at 91.3m b/d, down 2.9m b/d from its July's forecast.
"For the first time since 1945 most OECD countries are expected to face a severe economic recession in 2009," the IEA said in an update of its Medium-Term Oil Market Report. It added: "By the same token, emerging economies are bound to slow down, even if managing to maintain positive growth rates."
The IEA warned that its forecast could be revised lower again, saying that "even though the world economy is expected to recover from 2010 onwards, there is a risk that the slowdown might be more prolonged."
The drop in oil prices and the fresh lower demand forecast from the IEA makes it more likely that the Opec oil cartel will cut its production at a meeting in Oran, Algeria, on December 17.
The cartel has announced a cut of 2m b/d in the last two months and some countries are pushing to cut the group's output by at least another 1-1.5m b/d.
Copyright The Financial Times Limited 2008
