The International Energy Agency (IEA) has cut its estimate for world oil demand growth in 2001 by 9%.

The world's demand for oil has failed to meet expectations since October.

And even January figures show only modest growth despite the short-term substitution of oil for natural gas by some big industrial consumers in the United States.

The Paris-based IEA attributes the waning demand to a global economic slowdown.

The slowdown is most apparent in the US which is the largest consumer of oil in the world.

Market forces

The IEA has trimmed its estimate of global oil demand growth by 140,000 barrels to 1.5 million barrels a day.

Ironically, high energy costs have been blamed as one reason why the slowdown is occurring.

High fuel costs have a direct impact on business costs, forcing them to either raise selling prices or reduce profit margins.

But a reduction in demand should now help to bring prices lower and counter reduced production from Opec, the cartel of 11 oil producing nations.

The price of the benchmark for crude oil, Brent, has been highly volatile over the past year, rising from lows of $9 a barrel to peak at more than $35.

And the news from the IEA, together with milder weather, began to drive down the oil price on Monday morning.

Brent crude for March delivery was changing hands at $28.84 a barrel, down from the previous close of $29.18.