Yearly Oil Demand Drops for 1st Time in 25 Years

Yearly Oil Demand Drops for 1st Time in 25 Years

The International Energy Agency projects worldwide oil demand will fall by 200,000 barrels a day, to 85.8 million barrels a day, in 2008.

The IEA expects oil demand to recover next year, estimating an increase of 400,000 barrels a day, or 0.5%.

The oil futures markets appear to be pricing in a much steeper drop in demand – oil bounced $4+ today on this news, combined with a steep slide in the US dollar.

If the supply/demand situation in the oil markets remains tighter than anticipated, we could see a healthy rebound in oil. In fact, we could see one in the short-term regardless, as the entire energy complex appears to be quite oversold at the moment.

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