* IEA cuts forecast for 2009 oil demand by almost 1 mln bpd
* Bank of America, Merrill Lynch, Citigroup post huge losses
* U.S. inflation data due at 1330 GMT
(Recasts, updates prices, adds detail)
By Christopher Johnson
LONDON, Jan 16 (Reuters) - Oil slipped towards $35 a barrel
on Friday after the International Energy Agency cut its forecast
for world oil demand this year sharply and two of the biggest
U.S. banks reported massive losses.
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 about
500,000 bpd year-on-year. []
Bank of America <BAC.N>, which recently absorbed Merrill
Lynch, and Citigroup <C.N> both reported huge losses for their
fourth quarters on Friday, including billions of dollars of
writedowns from exposure to debt and real estate markets.
U.S. light crude for February delivery <CLc1> was down 7
cents at $35.33 a barrel by 1120 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 18 cents at
$47.86, maintaining an unusual premium to the U.S. benchmark due
to growing U.S. stockpiles and weakening U.S. oil demand.
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."
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 has said. []
Investors will be keenly watching U.S. CPI data, due at 1330
GMT on Friday, which are 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.
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 was likely
to cap oil prices for the rest of this year.
(Additional reporting by Fayen Wong in Perth; editing by
William Hardy)
