Doubts over demand push oil prices lower
Crude oil retreated below $60 a barrel today as doubts over fragile global demand put downward pressure on prices.
The fall is likely to ease the recent misery at the forecourt for drivers as petrol prices surged upwards.
Benchmark crude for August delivery slid to a low of $59.52 a barrel - well below its eight-month high above $73 seen last week.
Crude has followed global stock markets lower on increasing nerves over the strength of the recovery, with investors set to gauge the health of several major players in a crucial round of results.
The International Energy Agency (IEA) also kept unchanged today its predictions of a 2.9% fall in global oil demand – or 2.5 million barrels of oil a day – this year.
It forecasts a rebound in demand of 1.7% or 1.4 million barrels a day in 2010, although it warns that the prediction is “intrinsically perilous” due to the uncertainty over the pace and strength of recovery.
The IEA has based its views of the IMF’s forecasts of 1.8% global growth next year although it adds: “Should economic growth turn out to be more subdued... this 2010 demand forecast would indeed fail to materialise.”
And a 1.7% recovery in oil demand to 85.2 million barrels a day would still leave crude levels well below the 87.5 million barrels a day seen at the beginning of 2008 before the global crisis fully took hold.
The IEA said next year’s bounce-back in demand would be led by growth in countries outside the richer Organisation for Economic Co-operation and Development, where demand should rise 3.5% after stagnant growth in 2009.
The report added that OECD countries should also post “a modest recovery”, with demand up 0.2% as most of its economies emerge from the deepest slump in decades.
A rebound in oil demand next year would mark the end of two successive years of falling global oil demand, the first back-to-back yearly drop the world has seen since 1982 and 1983, the IEA added.
