High prices to slow oil demand growth: IEA

Persistent high prices combined with weaker GDP projections for advanced economies will hold back oil demand growth in 2011, according to the International Energy Agency (IEA).

IEA has trimmed forecast global oil product demand growth to 89.2 mb/d (+1.5 per cent or 1.3 mb/d in 2011 against 87.9 mb/d in 2010 (+3.3 per cent or +2.8 mb/d year-on-year) in the previous year.

The energy advisor to industrialised nations trimmed its global oil demand growth estimates to 1.29 million barrels per day, or 1.5 per cent, from 1.43 million bpd in its previous report.

"We clearly have seen demand growth slowing compared to last year's level and we're seeing it very much concentrated where the price feed through is most direct, notably in North America, in terms of gasoline," said David Fyfe, head of IEA's oil industry and markets division.

The IEA said that worries about the economic impact of strong prices together with weak economic data from the United States, China and Germany had contributed to profit taking, which took oil prices down sharply over the last week.

Prices for benchmark Brent and WTI crudes, after gaining $7-8 a barrel in April, plummeted more than $16 per barrel over the course of the week ended 6 May, to $109.13 and $97.18 a barrel, respectively. Prices have since partially recovered their losses, with Brent trading at $115 a barrel and WTI at $101 a barrel, IEA noted.