Crude Oil Falls on Demand Concerns After IEA Lowers Forecast

April 13 (Bloomberg) -- Crude oil fell in New York after the International Energy Agency cut their 2009 demand forecast to the lowest since 2004 because of the global recession.

Oil consumption will fall by 2.4 million barrels a day this year, about the same amount that Iraq produces, to 83.4 million barrels a day, the IEA said on April 10. Trading in New York and London was closed that day for the Good Friday holiday. U.S. crude supplies are at their highest since July 1993, the Energy Department said on April 8.

“The IEA has a history of being too optimistic towards world oil demand,” said Deutsche Bank analysts led by Joel Crane in a report on April 9. “On our estimates, global oil demand growth is equivalent to world GDP growth less 2 percent, which given our assumption that world growth will slump by 1.9% implies a potential contraction of global oil demand of over 3 million barrels a day.”

Crude oil fell as much as 62 cents, or 1.2 percent, to $51.62 a barrel in electronic trading on the New York Mercantile Exchange. It was at $52.00 a barrel at 6:55 a.m. Singapore time.

The contract closed 5.8 percent higher at $52.24 on April 9 as equities gained, signaling that some investors expect economies to stabilize, bolstering energy demand.

Oil demand will shrink by 2.8 percent this year as worldwide gross domestic product shrinks by 1.4 percent, according to the IEA, the adviser to 28 consuming countries. The organization had until now assumed the global economy would expand in 2009. The decline outpaces supply from OPEC’s third- largest producer, Iraq, which last month pumped 2.27 million barrels a day.

“The pace of contraction is close to early 1980s levels, with a growing consensus that economic and oil demand recovery will be deferred to 2010,” the Paris-based adviser said in its monthly report.