The International Energy Agency cut further its oil demand forecast during the last quarter of this year amid the continued European economic weakness and the impact of Hurricane Sandy in North America, and said the global economy will limit consumption expansion in 2013.
In its monthly market report, the Paris-based agency, which represents major energy consuming nations, reduced its forecast for global oil demand in the final three months of 2012 by 290,000 barrels a day to 90.1 million barrels a day. Over the past five months, the IEA has cut its estimates for fourth-quarter demand by 850,000 barrels a day.
Oil traded Tuesday at midday down 53 cents to $85.03 per barrel.
"A weak economic backdrop continues to restrain oil demand growth throughout the forecast," the report said.
For 2012 as a whole, the IEA now estimates average daily demand at 89.6 million barrels, slightly higher than 88.9 million barrels in 2011.
The agency kept its forecast for oil demand growth in 2013 unchanged at 800,000 barrels a day, but warned of downside risk in its estimates for the world's richest industrialized nations, highlighting the ongoing economic problems in Europe and the looming U.S. fiscal cliff.
Growing pessimism over the struggling global economy pushed oil futures down to four-months lows in early November.
The Organization of the Petroleum Exporting Countries last Friday cut its demand forecast for 2013 by about 20,000 barrels a day to 89.57 million barrels a day – though it would still be up by about 1 percent from this year. "The economy is placing a considerable amount of uncertainty on the world oil demand forecast," the group warned.
The slowdown in demand growth comes as global output rose by 810,000 barrels per day in October, even though total OPEC production eased 30,000 barrels per day.
The IEA said Iran's production and exports had both rebounded in October, halting a seven-month downtrend and adding to growing global supply. Iran has been hit by hard economic sanctions by the West over its nuclear program, but China and South Korea appeared to have increased their imports of crude from the Islamic Republic.
Iranian output rose 70,000 barrels to 2.7 million barrels a day. Exports increased by 300,000 barrels to 1.3 million barrels a day, the IEA said.