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Oil markets

Demand slides and WTI is cut adrift

THE GLOBAL economic downturn is causing havoc in oil markets. Last month, the International Energy Agency (IEA) again revised its forecast demand figures downwards, noting that stocks are at record levels. The crude build in tanks at Cushing, Oklahoma, is now so large that WTI's role as an international benchmark is also under threat.

A halving of forecast global GDP growth for 2009, to 1.2%, led the IEA to lop 1m barrels a day (b/d) from predicted world oil demand this year. The agency expects oil consumption to be 85.3m b/d, 0.5m b/d lower than in 2008. It also says demand fell by 300,000 b/d in 2008 compared with 2007. "The expected two-year contraction in oil demand would be the first since 1982 and 1983," the IEA said in its most recent monthly report.

Even the IEA's latest figures are likely to be revised, if other more bearish forecasts are to ...Click here to continue reading Oil markets