AFP reported that Oil is riding a big dipper with prices plunging again on uncertainty about debt levels in the West signs of a slowdown in emerging markets and political paralysis.
IEA said that crude oil prices have plunged for the third time in 3 months. A drop of USD 12 per barrel to USD 15 per barrel in about 10 days as it cut its demand forecast for this year.
The International Energy Agency trimmed its estimate for global oil demand this year by 100,000 barrels per day because of a downward revision to demand in the Q2 high prices and slowing economic growth. At the same time, it raised its 2012 forecast by 100,000 barrels per day anticipating that Japan will increase its oil consumption as it makes up for the loss of nuclear generated power in the aftermath of the devastating March earthquake.
The IEA said that August has a habit of springing both geopolitical and meteorological surprises so the big dipper ride may still have further to run. Oil prices were higher just before the IEA published its monthly report at USD 81.02 per barrel for the benchmark US WTI contract a gain of USD 1.72.
The IEA's new forecasts put demand this year at 89.5 million barrels per day up 1.2 million barrel per day or 1.4% from 2010 with 2012 rising to 91.9 million barrel per day up 1.6 million barrel per day or 1.8% from this year. Should global economic activity slow by more than expected however, the demand figure for this year would be cut by 0.3 million barrel per day and next year by 1.3 million barrel per day.
The IEA, the energy monitoring arm of the Organization for Economic Cooperation and Development said that concerns over debt levels in Europe and the US, and signs of slowing economic growth in China and India have spooked the market and raised fears in some quarters of a double dip recession. From an oil market standpoint, perceived wisdom is that this must inevitably mean weaker oil demand to come.
It noted that extra supplies of oil were now reaching the market, notably because members of the Organization of Petroleum Exporting Countries had increased supplies in order to make up for a shortfall in Libya.
(Sourced from AFP)
