Oil consumption will average 85.75 million barrels a day in 2008, down 50,000 barrels from 2007, the Energy Department said in its monthly Short-Term Energy Outlook released today in Washington. As fuel use drops, OPEC is discussing making the second output cut in less than two months at a Dec. 17 meeting.
Crude oil for January delivery fell $1.65, or 3.8 percent, to $42.06 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange.
Global consumption hasn’t slipped since the early 1980s, when demand fell for the four years ended in 1983, according to the department. This year’s forecast was cut 140,000 barrels from November.
Demand will average 85.3 million barrels a day in 2009, down 0.5 percent from this year. The 2009 demand estimate is 630,000 barrels a day lower than the forecast a month ago.
The International Energy Agency and the Organization of Petroleum Exporting Countries have also lowered demand forecasts over the past month because of the economic contraction.
Oil futures, which have dropped 66 percent this year, are heading for the biggest annual decline since at least 1987, as global economies falter. The International Monetary Fund sees recessions next year in the U.S., Japan and the euro area.
U.S. stocks fell after companies from FedEx Corp. to Danaher Corp. forecast earnings that disappointed investors as the recession crimped sales. The Dow Jones Industrial Average declined 212.98, or 2.4 percent, to 8,721.20. The Standard & Poor’s 500 Index dropped 13.04 points, or 1.4 percent, to 896.66.
The decline in crude oil has sent both gasoline futures and pump prices lower this year.
Gasoline for January delivery fell 2.32 cents, or 2.4 percent, to 93.86 cents a gallon in New York. Futures touched 89.5 cents a gallon on Dec. 5, the lowest since the contract was introduced in October 2005.
U.S. pump prices last week fell to $1.699 a gallon, the lowest since February 2004, the Energy Department said yesterday.
OPEC should make a substantial” output cut when it meets, Shokri Ghanem, Libya’s top oil official, said yesterday. OPEC agreed to cut daily output by 1.5 million barrels in October.
A government report tomorrow is forecast to show that U.S. crude-oil inventories rose 1.5 million barrels last week, according to the median of 13 responses in a Bloomberg News survey. The report will probably show that U.S. supplies of gasoline and distillate fuel, a category that includes diesel and heating oil, dropped.
The Energy Department is scheduled to release its weekly report tomorrow at 10:35 a.m. in Washington.
Brent crude oil for January settlement declined $1.93, or 4.4 percent, to $41.49 a barrel on London’s ICE Futures Europe exchange.