* IEA cuts forecast for '09 oil demand by almost 1 mln bpd
* Russia-Ukraine gas dispute rumbles on
* Bank of America, Citigroup post huge losses
(Recasts, updates prices; changes dateline from LONDON)
By Edward McAllister
NEW YORK, Jan 16 (Reuters) - Oil prices fell 2 percent on
Friday as the International Energy Agency's sharp reduction of
its 2009 world oil demand forecast outweighed support from a
continued cut in Russian gas supplies to Europe.
The IEA revised its estimate for 2009 demand downward by
940,000 barrels per day to 85.3 million bpd -- a fall of about
500,000 bpd year-on-year -- as the economic slowdown erodes
consumption. []
U.S. light crude for February delivery <CLc1> fell 73 cents
to $34.67 a barrel by 11:50 a.m. EST (1650 GMT), after hitting
a high of $36.73. The contract, which expires on Tuesday, sank
on Thursday to $33.20, the weakest price in nearly a month.
London Brent crude for March delivery <LCOc1> fell 40 cents
to $47.28 a barrel, maintaining an unusual premium to the U.S.
benchmark due to growing U.S. stockpiles.
"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 by just 90,000 bpd
in 2009 as its GDP growth slows to 6.5 percent.
The Organization of Petroleum Exporting Countries, which
already has 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. []
The global financial crisis has forced many economies into
recession, reducing energy consumption and dragging down oil
prices by more than $110 since a record peak in July.
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.
The IEA report outweighed the effect of a contract dispute
between Russia and Ukraine that led to a cut of gas supplies
through Ukraine to Europe, affecting countries across the
continent.
The European Commission said on Friday that Russia and
Ukraine had a last chance this weekend to solve the dispute, or
risk seeing their relations with the bloc suffer.
The European Union normally gets a fifth of all its gas
from Russia via Ukraine. The loss of this supply has forced
generators to switch to oil and coal at a time when Europe is
experiencing bitter winter temperatures.
(Additional reporting by Robert Gibbons and Gene Ramos in New
York and Christopher Johnson in London; Editing by Walter
Bagley)
