GDP growth slowdown 'drives down oil demand'

27 November 2008

The global growth domestic product slowdown resulting from the economic crisis is forcing oil demand to its lowest in a generation, according to poll carried out by Reuters.

Analysts have said that demand is set to decline by 20,000 barrels per day to 86.03 million in 2008 and 86.01 million in 2009.

They have attributed falling demand to recessions across the Organisation for Economic Co-operation and Development (OECD), whose consumption is likely to drop to around 46.95 million barrels per day in 2009.

Societe Generale analyst Michael Wittner told Reuters: "When prices were rising, demand in OECD Europe and Asia did not fall nearly as much as in the US where taxes are a much smaller component of the price."

Despite this, projections of reduced decline next year are likely to drive prices down which may be good news for home heating oil customers when the benefits of the lower costs filter through.

Meanwhile, US crude is now standing at $53.22 (£34.44) per barrel and Brent crude at $52.90.

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