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.