In Depths of Recession, Oil Demand Shrinks

(AP) The International Energy Agency said Thursday that global oil demand will shrink this year for the first time in a quarter-century as rich nations fall into recession and growth slows in the developing world.

The Paris-based agency, which represents the interests of 28 oil-importing nations, also cut its forecast for global demand next year, saying a rebound in demand depends on economic recovery in the second half of 2009.

The IEA cut its forecast for global oil demand this year by 350,000 barrels a day to 85.8 million barrels a day, down 0.2 percent from 2007.

"The global demand contraction expected in 2008 will be the first since 1983," the agency said in its monthly oil market report.

The IEA slashed its forecast for oil demand in developed nations in the 30-country Organization for Economic Cooperation and Development by 290,000 barrels a day this year and 210,000 barrels a day in 2009.

Demand in non-OECD countries will rise 3.9 percent this year and 2.9 percent in 2009, the IEA said, slightly slower than its forecast in its report for November. It said the predicted cuts were linked to the economic slowdown and revised data in Asian countries like Malaysia, Taiwan and Thailand.

Global oil demand will increase 0.5 percent next year to 86.3 million barrels a day, the IEA said, but it added that this forecast assumes that the plunge in OECD economic growth will bottom out next year and recover in the second half of 2009. The International Monetary Fund has made a similar estimate.