When OPEC unexpectedly announced a return to its original production target this morning, they said that the world is oversupplied with oil and that there is “a shift in market sentiment causing downside risks.”
That shift in market sentiment? That’s the West saying, enough with the outrageous oil prices already. The International Energy Agency said today that the demand for oil in the U.S. “may be poised for a more permanent, rather than transient, downward trend,” owing to the summer oil price spike and the continued economic malaise.
In other words, it’s not just the U.S. that’s going to use less oil in the next year.
WSJ: The Paris-based energy watchdog said in its monthly report that global oil demand this year will average 86.8 million barrels per day, and 87.6 million barrels a day in 2009.
Those forecasts were respectively 100,000 barrels and 140,000 barrels per day lower than the IEA’s previous forecasts.
The IEA cut its forecast for demand in countries belonging to the organisation for Economic Cooperation and Development — mostly developed Western nations — by 160,000 barrels a day to 48.4 million barrels a day this year, representing a drop of 1.6% from 2007.
This would explain why Saudi Arabia argued that low oil prices are a good thing before the meeting. The last thing OPEC needs or wants is for the West to use less oil.
(And watch how fast we forget all about conservation and alternative energy if the price drops to, say, $50 again.)
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