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IEA cut oil-consumption forecast for emerging markets

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Staff writer ▼ | February 14, 2014
Oil consumptionThe International Energy Agency (IEA) cut its oil-consumption forecast for emerging markets this quarter but said lost demand would be made up for by a resurgent U.S. economy in the course of the year.

The views echo a warning by oil producers that economic turmoil in Asia and Latin America could dent their appetite for crude oil. In its monthly oil market report IEA said it trimmed its oil-demand forecast for developing countries by 80,000 barrels a day in the first quarter. The IEA blamed an "increase in the cost of doing business as interest rates have been hiked in many countries in an effort to defend domestic currencies."

In January, a sudden drop in the value of the Argentine peso—after the central bank stopped shoring it up—led to a broad selloff in emerging-market currencies. Still, the IEA slightly increased its overall demand forecast for the year by 125,000 barrels a day to 92.6 million barrels a day, citing improving prospects for the U.S. economy.

Oil producers in the Middle East and Africa have set their eyes on emerging markets, notably in Asia, after being increasingly squeezed out from the U.S. by booming shale-oil production.

The Organization of the Petroleum Exporting Countries sounded out similarly contrasting views. It said oil-demand prospects in Asia and Latin America could be lowered because of their economic problems but upgrade its overall forecast on a robust U.S. recovery.

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