The International Energy Association cut its global growth demand forecast by 230,000 barrels per day.
The agency said Friday it now expects 2015 demand to grow by 900,000 bpd to 93 million bpd.
“While demand growth is still expected to gain momentum in 2015 from 2014, the acceleration is now looking more modest than previously foreseen, in line with the ever-more tentative pace of the global economic recovery,” the IEA said.
The growth forecast for non-OPEC producers rose by 200,000 bpd with daily output expected to hit 1.3 million bpd, a slight drop from the record high 1.9 million bpd seen this year.
“Despite lower crude oil prices, we expect U.S. production to continue to grow apace in 2015,” expanding by 685,000 barrels a day, the agency said.
The downward revision is the fourth in the last five months.
Oil prices dipped 3 percent on news of the forecast cut.
The IEA also threw cold water on the assumption that lower oil prices will bolster flagging global economies.
“The adverse impact of the oil price rout on oil-exporting economies looks likely to offset, if not exceed, the stimulus it could provide for oil-importing countries against a backdrop of weak economic growth and low inflation,” the IEA said.
However, some analysts expect lower oil and gasoline prices will eventually translate to more consumer spending.
Barclay’s estimated a 20 percent fall in U.S. gas prices could free up $70 billion in consumer spending, enough to offset a $40 billion decline in capital spending tied to the energy sector.