AFP - The International Energy Agency on Friday cut its oil demand forecasts due to a much sharper-than-expected economic slowdown, with the market facing its first two-year contraction since 1982 and 1983.
  
The IEA said it wanted to anticipate sharp downward revisions to global economic growth forecasts and so had halved its own estimate to just 1.2 percent "given the worsening outlook."
  
Accordingly, it cut its projection for 2009 oil demand by one million barrels per day (bpd) to 85.3 million bpd, representing a fall of 0.6 percent from revised 2008 figures.
  
For 2008, the IEA put global oil demand at 85.8 million bpd, down 0.3 percent, adding that "the expected two-year contraction in oil demand would be the first since 1982 and 1983."
  
In a regular monthly report, the IEA noted that OPEC output in December was down one million bpd from September and down nearly two million bpd from mid-2008 highs when oil hit record highs above 147 dollars per barrel.
  
The New York oil contract Friday was trading around 35 dollars, holding at multi-year lows on fears that the global slump, especially in the United States, the world's biggest energy consumer, will undercut demand.
  
OPEC, which has cut output 4.2 million bpd over recent months in a bid to support prices, on Thursday warned that global oil demand would contract by a more-than-expected 0.2 percent this year in light of the economic crisis.
  
"The depressed world economy is expected to have a large impact on oil demand this year," especially in industrialised countries, the Organization of the Petroleum Exporting Countries said in a monthly report.
  
"The year 2009 started with a very depressed world economy which caused the year's oil demand forecast to show negative growth" of 0.18 million barrels per day (bpd) or 0.2 percent, OPEC said.
  
In 2008, global oil demand was estimated to have contracted by 0.1 million bpd, "the first decline in over two decades," it added.
  
OPEC pumps about 40 percent of the world's oil.