World Demand for Oil Fell in Third Quarter
PARIS – A slumping U.S. economy and the fallout from the Sept. 11 terrorist attacks reduced world demand for oil in the third quarter, the International Energy Agency said in its monthly report released Monday.
The report came ahead of a meeting by OPEC producers in Vienna this week at which they are expected to cut production by at least 1 million barrels a day.
World oil demand in the third quarter 2001 fell by an estimated 750,000 barrels per day, or about 1 percent, from the same quarter a year earlier, to 75.7 million barrels per day, the Paris-based agency said.
``Early indications of oil products deliveries for September confirm expectations of a downturn in global oil demand, as the already ailing economy of the United States and the rest of the world deteriorates in the wake of the terrorist attacks on the United States,'' the report said.
Venezuelan President Hugo Chavez told a news conference on the sidelines of the U.N. General Assembly's annual meeting Saturday that the oil cartel's 11 member countries, including Venezuela, have reached a ``definite'' consensus to cut production by at least 1 million barrels per day and perhaps as much as 1.5 million barrels per day.
Several non-OPEC producers have agreed not to hike their production, Chavez said, without naming any countries. Mexico and Norway have publicly demurred, while on Monday, Russia said it would cut its oil output by 30,000 barrels per day in the first quarter of this year and at the start of 2002 in an effort to help stop the slide of world oil prices.
Crude oil prices fell about $2 per barrel between early October and early November, the IEA report said. And in trading Monday, light sweet crude for delivery in December was down $1.31 to $20.91 in trading on the New York Mercantile Exchange.
Analysts criticized the Russian move as too small, however, given Russia's total daily output of about 7 million barrels.
``It's on the error margin,'' said Erik Wigertz, an oil analyst at Brunswick UBS Warburg investment bank in Moscow. ``Thirty thousand barrels a day isn't a serious proposition. It doesn't really matter if it holds or not.''
OPEC, which supplies 23.2 million barrels a day - about a third of the world's oil - has already cut production three times this year. Although demand has continued to weaken, concern that higher prices might intensify the global economic malaise has made OPEC reluctant to cut output again in the aftermath of the Sept. 11 attacks on the United States.
The IEA, a unit of the Organization of Economic Cooperation and Development, reiterated its estimate that demand will rise by 100,000 barrels per day this year to an average of 76 million per day. Last month, the IEA lowered its growth estimate for 2001 by more than 400,000 barrels per day, citing the anticipated effects of the terror attacks.
The most dramatic third-quarter decline was in the United States, and the IEA now expects North American oil demand in 2001 to average 90,000 barrels per day less than in 2000.
The IEA expects demand to continue falling until the middle of next year throughout the OECD member states, although the pace of the decline is expected to slow after the fourth quarter in 2001.
However, the report said strong growth in oil demand in non-OECD countries is likely to help offset sluggish OECD growth. Markets such as China and Russia remain relatively sheltered from the global economic slowdown.