SHOOT: The world economy forecast to contract by 0.2% in 2009 Oil demand is projected to decrease by between as little as 0.1% this year [in non-OECD countries] to as much as 2.8% But what about supply? Non OPEC supply is expected to decrease 0.4% and OPEC supply 5%. That's a total of 5.4%. Supply down 5.4%, demand 2.4% maximum. Ergo:
"The weakening trend for non-OPEC supply, adding to the impact of OPEC output cuts, could push oil prices *sharply higher* when demand rebounds during any economic recovery."
REUTERS: "Potentially down the road, there is scope for non-OPEC supply to weaken further due to spending cuts in 2009," said David Fyfe, head of the IEA's Oil Industry and Markets division.
The IEA also said that spending cuts in response to lower oil prices could reduce non-OPEC supply by a further 360,000 bpd by the end of 2010, mainly from mature producing regions such as the North Sea, United States and Mexico.
Non-OPEC producers account for about three in every five barrels of oil.
In its closely watched monthly survey, the IEA cut its forecast for demand this year by a daily 1 million barrels to 83.4 million barrels a day -- 2.8 percent lower than last year.
The IEA said that "the pace of contraction is close to early 1980s levels, with a growing consensus that economic and oil demand recovery will be deferred to 2010."
In rich countries belonging to the Organization for Economic Cooperation and Development, the IEA forecasts a cut in oil demand of 760,000 barrels to 45.2 million barrels a day -- 4.9 percent lower than 2008.
In non-OECD developing countries, the IEA said it has lowered its expectation for oil demand by 230,000 barrels to 38.3 million barrels a day -- 0.1 percent lower than last year.
"Although small, this will be the first contraction in non-OECD demand since 1994," the agency said.
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