Global oil demand this year might not be as high as earlier thought, according to one leading crude-markets tracker. Going into this spring, the International Energy Agency (IEA) reduced its 2006 global demand growth estimate for crude from an earlier 1.78 million barrels per day to 1.49 million-a drop of nearly 300,000 barrels. Paris-based IEA, which acts as energy-policy advisor for 26 member countries around the world, expects global oil demand to average 84.74 million barrels per day in 2006, a gain of only 1.8% over the 2005 level. At the same time, the IEA also reduced its 2006 non-OPEC daily oil-supply forecast by 110,000 barrels, to 51.29 million. Thus, it would appear that the supply/demand gap is narrowing and that the projected "call on OPEC" oil has peaked. However, the cartel's ability to fill the estimated call on its output remains in question as geopolitical concerns still dominate oil-trading activity. "We are more concerned about OPEC's ability to maintain output at required levels for second-half 2006 in view of serious production issues in countries like Iraq, Nigeria, Venezuela and Iran," says Adam Sieminski, chief energy economist for Deutsche Bank in New York. Supporting this view, he says the IEA's estimate of January 2006 daily crude output from the cartel was recently revised downward by more than 200,000 barrels, from 3.9 million to 3.7 million. "So despite the recent reduction in the IEA's 'call on OPEC' evidenced in its March oil-market report, we suspect that actual spare [productive] capacity in OPEC is not growing much." The energy economist adds that while industry-controlled crude inventories in the 30-member OECD (Organization for Economic Cooperation and Development) remain high on an absolute basis, forward demand cover is still hovering around a relatively low 51 days. "We still believe that the biggest threat to growth in global oil demand is likely to come in the form of a slowdown in GDP-either from the slow rise in interest rates as central bankers tackle inflation, a quick shot to consumer confidence that would accompany fear of supply interruption, such as a confrontation with Iran, or the impact of an unpredictable avian-flu pandemic," says Sieminski. "Another source of oil demand pressure could come in the form of the relentless impact of commodity prices and policy decisions on consumer demand." Indeed, the economist points out that among the developments leading to the IEA's recent downward revisions were high global oil product and U.S. gas prices, coupled with the dieselization of Europe's vehicle fleet, the deregulation of administered energy prices in Asia, airline conservation, and normalization of demand in China. The implications for oil prices this year? "We think that during 2006 OPEC is likely to defend a near-term price floor of $55 for West Texas Intermediate (WTI) oil," says Sieminski. "In view of [still] strong global growth, little spare production capacity, geopolitical and weather risks, we see little reason to lower our $60 [average WTI oil price] estimate for the year-and the risk to our $45 [oil price] forecast for next year is to the upside."