Agence France-Presse . Paris

The world oil market could be set for a lengthy slowdown, the International Energy Agency said on Wednesday, signalling a sharp shift in the climate that pushed the oil price to 100 dollars last month.

In light of weaker global economic prospects, the IEA cut its forecast for world demand for oil this year by 200,000 barrels per day.

It said it expected world demand in 2008 to grow by 1.9 per cent instead of 2.2 per cent forecast last July. 'Just as the demand shock of 2004 shaped the oil market for the next three years, so too could the pending slowdown,' the agency, which coordinates energy policies for the main industrialised consuming nations, commented in its monthly review of oil trends.

'One of the most indicative factors since we released the last monthly report was the negative news on the world economy, especially in the United States, yet the oil price remained unchanged,' IEA chief analyst Lawrence Eagles told AFP.

The latest study, which noted that crude oil prices were little changed from mid-January at just over 90 dollars a barrel, said 'an economic slowdown has the potential to change the landscape over the next few years: depending on how deep it is and how long it lasts.'

But it also noted that projected robust economic momentum in China and the Middle East, two key centers for oil demand growth, stood in contrast to sluggish performances expected in the world's principal industrialised nations.

The IEA findings, according to Natexis bank analyst Moncef Kaabi, point to a 'globally balanced oil market this year, apart from geopolitical tensions, but there will be no real price stability as long as Asian demand does not slow.' China's demand for oil is forecast to grow 5.8 per cent this year to 7.9 million barrels a day after a 4.5 per cent rise in 2007.

But the IEA cautioned that recent widespread power shortages and severe weather in China 'have cast a shadow over the 2008 prognosis.'

While power cuts could point to a surge in oil demand for energy generation, recent snowstorms have disrupted transportation during the Lunar New Year holiday and could therefore depress demand for transportation fuel.

The IEA found that in January, world oil supply had risen by 745,000 barrels per day to 87.2 million barrels 'on new output from Brazil and recovering non-OPEC output elsewhere.'

Supplies from the Organization of Petroleum Exporting Countries had remained close to 32.0 million barrels per day on increased output from Angola, the United Arab Emirates, Saudi Arabia and Kuwait, while production had eased in Iraq, Nigeria and Qatar. However, OPEC's real spare capacity had risen to 2.4 million barrels per day in January.

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