* IEA cuts forecast for 2009 oil demand by almost 1 mln bpd
* U.S. inflation data and U.S. bank results due later
(Updates throughout with IEA report, prices, detail)
By Christopher Johnson
LONDON, Jan 16 (Reuters) - Oil fell to around $35 a barrel
on Friday after the International Energy Agency cut sharply its
forecast for world oil demand this year.
The IEA said in its monthly oil report that world oil demand
would contract as the economic slowdown eroded consumption. The
agency revised its estimate for 2009 demand down by 940,000
barrels per day (bpd) to 85.3 million bpd -- a fall of more than
500,000 bpd year-on-year. []
U.S. light crude for February delivery <CLc1> was down 30
cents at $35.10 a barrel by 0945 GMT, after hitting a low of
$34.77. The contract, which expires on Tuesday, touched a low of
$33.20 on Thursday, the weakest in nearly a month.
London Brent crude for March <LCOc1> was up 7 cents at
$47.75, maintaining an unusual premium to the U.S. benchmark due
to the disruption of Russian gas supplies to Europe and growing
U.S. stockpiles.
The price of oil for delivery in February has fallen about
14 percent so far this week, as a string of dismal figures from
major economies stung investor confidence and portended further
weakness in oil demand in months ahead.
"Global oil demand is reducing at an alarming rate," said
Rob Laughlin, senior oil analyst at MF Global in London.
"This latest report from the IEA is another warning shot
across the bows to OPEC that supply is still outpacing demand
and the situation is getting worse seemingly day by day."
"Whilst OPEC is making an effort to adhere to quotas, the
clear picture shows that another cut is required and soon."
CHINESE GROWTH SLOWING
In its report, the IEA said Chinese oil demand would grow at
its slowest rate in eight years, rising just 90,000 bpd in 2009
as its GDP growth slows to 6.5 percent.
The gloomy global economic outlook has also prompted OPEC to
forecast a fall of 180,000 barrels per day (bpd) in world oil
demand this year. []
The producer group, which has already cut 4.2 million bpd in
supply from the world market since September, could quickly
deepen output cuts if needed, OPEC President Botelho de
Vasconcelos said on Thursday. []
Investors will be keenly watching U.S. CPI data, due later
on Friday, which is expected to show a drop of 0.9 percent in
December, while a preliminary index of January consumer
sentiment in January is expected to erode to 59.0 from 60.1 in
December.
They are also nervously awaiting earnings results from Bank
of America and Citigroup <C.N> later on Friday, with both
expected to post more losses.
The financial crisis has forced a growing number of major
economies into recession. Energy consumption has waned sharply,
prompting oil prices to tumble by more than $110 since a record
peak in July.
Analysts said the glut in global crude supplies would
continue to cap oil prices for the rest of this year.
"With between one-half and one day of global demand on the
water in floating storage, OPEC would have to tighten the market
by one-half to 1 million bpd below current demand levels for an
entire quarter to get rid of the surplus," JP Morgan said in a
research note led by Lawrence Eagles.
(Additional reporting by Fayen Wong in Perth; editing by
William Hardy)
