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Oil demand still sliding

Global oil consumption will be 83.4m b/d in 2009, says the IEA. That represents another downward revision to previous forecasts – following a reassessment of global GDP assumptions and much lower-than-expected demand data from the first quarter of 2009. If the projection for demand holds, consumption will have fallen by 2.4m b/d compared with 2008.

Supply is also falling – by 400,000 b/d in March, to 83.4m b/d. Most of the fall came from Opec: March output, at its lowest level in five years, was 27.8m b/d, down by 235,000 b/d from February. Output from the 11 quota-observing members remains 0.72m b/d over the rolled-over March target of 24.9m b/d. Opec's spare capacity is now 5.5m b/d, says the IEA. Others say it exceeds 6m b/d.

Non-Opec supply fell by 170,000 b/d, with a 220,000 b/d dip in OECD countries' production partly offset by higher non-OECD output. Forecast non-Opec production in 2009 has also been revised downwards to 50.3m b/d (compared with 50.6m b/d last year), largely on account of lower biofuels output and weaker first-quarter crude production in Asia, says the IEA. Effective spare capacity is around 5.5m b/d.

Meanwhile, OECD stocks continue to expand, rising by 7.5m barrels in February to over 2.7bn barrels, 7.2% more than a year ago. The IEA expects lower crude prices to persist in the third quarter, amid demand revisions, weak middle-distillate cracks and reports of "bulging product inventories in several markets".

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