The International Energy Agency (IEA) revised its forecasts today stating that world oil demand will plummet 2.4 million barrels per day in 2009 based on growing consensus that economic recovery will not take place until 2010.
While the IEA doesn’t have an economic crystal ball, it’s predictions can be self fulfilling prophecies based on the purchase of oil futures, and the forecast is a mixed bag for U.S. manufacturers and retailers. While it is based on concerns that a significant economic rebound is further out than we’d all like it, reduced demand will most likely result in the continued stability of fuel costs and petroleum based products.
According to money.com: As demand has disappeared, stocks have swollen in developed countries and stood at 61.6 days of forward demand cover in February, a measure closely watched by producer group OPEC, which considers around 52 days comfortable.
The Organization of the Petroleum Exporting Countries has agreed to reduce supply by 4.2 million bpd since September.
Analysts have said discipline is unlikely to increase much more as members of the group have said current oil prices of roughly $50 a barrel are a good compromise given the weakness of the economy.