BP CEO says high oil prices causing 'slight restraint' on demand

London (Platts)--26Oct2005

Global demand for oil products has been reduced slightly due to the
recent record price levels, BP CEO John Browne said Wednesday.
     "It is very difficult to read the bits and pieces you get from global
indicators of demand...but I do have a sense that there is a slight restraint
in consumption," Browne said at an oil and gas forum in London.
     Browne pointed to sales of lubricants as an example, which motorists are
buying with "slightly less" frequency due to higher prices.
     The BP CEO also said high prices are causing consumers to purchase more
oil products using credit, which increases their sensitivity to the total
spending on oil products.
     Browne's comments come a day after BP's chief financial offer said on a
conference call with investment analysts that there is no significant sign of
a demand slowdown because of surging prices.
     "There's been a lot of speculation that the higher prices would put a
brake on consumption," CFO Byron Grote said. "Although there tends to be
various anecdotal evidence to support that, when we look at the main figures,
we're not seeing any material slowdown at all on the demand across the globe."
     Crude oil has been falling from a record of $70.85/bbl reached Aug
30 in New York, partly on expectations the price rally will cause "demand 
destruction." On Wednesday, crude was down 47 cts at $61.97/bbl at 1030 GMT.
     The International Energy Agency and OPEC have trimmed global demand
estimates for 2005, citing high prices, in recent weeks. Still, both expect
the pace of demand growth to accelerate in 2006.

--Robert Perkins, robert_perkins@platts.com

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