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Saying record energy prices may be pressuring demand, the International Energy Agency on Tuesday cut its estimates for world oil demand. "[There are] strong indications that high prices are depressing demand, which, together with signs of higher output from Saudi Arabia, Iraq and Nigeria, have capped further price gains," the Paris-based agency said as it dropped its forecast for fourth-quarter demand by 500,000 bbls./day and its 2008 daily demand outlook by 300,000 barrels. Global daily demand for crude next year, it believes, will be 87.69M bbls. "From a practical standpoint, hitting a round number may not confer any specific damage, but the cumulative $70 rise in price since 2002 is, we believe, having a cumulative effect," it noted. The report added, however, that it was too soon to believe that the effects would be permanent. The price of crude has retreated in its march towards $100 since touching a record $98.62/bbl. last week, dropping as much as $1.30 more to $93.32/bbl. early Tuesday after the report was released. "The whole fact that we've approached $100 has created a scare for some people," one analyst said. "The underlying fundamentals are that we're expecting tighter markets through 2015." The move comes ahead of an OPEC meeting this weekend at which Saudi Arabia may push for expanded output.

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Source: IEA Cuts Oil Demand Outlook