Global Oil Recession

The International Energy Agency said that global oil demand will shrink this year for the first time in a quarter-century as rich nations fall into recession and growth slows in the developing world. For the first time in 25 years, demand for crude oil will fall.

The IEA cut its forecast for global oil demand this year by 350,000 barrels a day to 85.8 million barrels a day, down 0.2% from 2007.

Global oil demand will increase 0.5% next year to 86.3 million barrels a day, the IEA said, but it added that this forecast assumes that the plunge in OECD economic growth will bottom out next year and recover in the second half of 2009. The International Monetary Fund has made a similar estimate.

But oil prices jumped today after the House passed a $14 billion stop-gap measure designed to keep the U.S. auto industry from immediate collapse. The dollar slipped against the 15-nation euro, British pound and Japanese yen. So oil prices rose on Thursday as the value of the U.S. dollar fell versus other major currencies.

Investors are also looking for a large cut in production from the OPEC about 40% of the world's oil.