IEA cuts oil demand forecast on economy, prices

 World oil demand will be lower than expected this year and next as economic slowdown and high prices curb consumption, the International Energy Agency (IEA) said on Thursday.

The agency, which advises major industrialised countries on energy policy, said fuel use had been lower than forecast in the United States, China and Japan in the third quarter and the outlook for demand could be trimmed further if economic activity slowed.

"The demand picture could sour significantly should economic prospects falter," the IEA said in its monthly Oil Market Report.

The IEA said Libyan oil production was recovering far faster than expected following the overthrow of former dictator Muammar Gaddafi and was now around 530,000 barrels per day (bpd), reaching 1.17 million bpd by the fourth quarter of 2012.

This would still be well below Libyan output levels before the start of the country's civil war of 1.6 million bpd.