Oil hits new 17-month low on IEA demand downgrade

11th September 2014, Comments 0 comments

Global oil prices fell further on Thursday, with Brent reaching a new 17-month low after the International Energy Agency cut its forecasts for world demand.

The news mirrored similar demand forecast downgrades this week from both the US government's Energy Information Administration (EIA) and the Organization of the Petroleum Exporting Countries (OPEC).

In early Thursday morning deals, Brent North Sea crude for October sank to $97.10 per barrel -- the lowest point since April 18, 2013.

And US benchmark West Texas Intermediate (WTI) for October delivery slid to $90.92 -- a level last seen on May 2, 2013.

The market had already forged multi-month lows this week on the back of plentiful global crude supplies.

Prices plumbed the latest lows on Thursday after the Paris-based IEA, which advises on energy policy to industralised nations, cut its oil demand outlook, citing weaker economic growth in both Europe and China.

The IEA cut its estimate for oil demand this year to growth of 1.0 percent or to 900,000 barrels per day, from a previous estimate of 1.1 percent or 1.0 million barrels per day.

That takes total demand for the year to 92.6 mbd.

"Oil demand growth (is) slowing at 'remarkable' pace, the International Energy Agency has said in its monthly report today," said Ole Hansen, head of commodity strategy at Saxo Bank.

"This the final of monthly reports from the big three pick up the same theme as what has been said by the EIA and OPEC this week."

Falling oil prices this week have sparked market speculation that OPEC could call an emergency meeting to halt the slide.

However, cartel member Kuwait said Thursday there was no need to call such a meeting.

"We do not believe there is a need to call an emergency OPEC meeting" to discuss the drop in prices, Oil Minister Ali al-Omair told reporters at the end of a regular meeting of the oil ministers of the Gulf Cooperation Council (GCC).

"So far, we are confident that prices have not dropped to the extent that makes us call for an emergency meeting," Omair said.

Inenco anlayst Dorian Lucas added that OPEC would however be concerned that oil was falling further below its target $100 level.

"Oil prices have fallen below the OPEC preferred level of $100 on concern of weakening demand and ample supplies, which has prompted raising speculation of whether Saudi Arabia -- OPEC's largest producer -- would reduce output," said Lucas.

"Yesterday Saudi Arabia informed OPEC that it had in fact reduced its output to 400,000 bpd in August which is likely to slow recent Brent crude downside momentum going forward."

OPEC had also said on Wednesday in a report that demand would grow by 1.05 million barrels per day in 2014 to 91.2 million barrels, trimming 50,000 from the previous outlook.

Demand in 2015 is expected to grow 1.19 million barrels per day, 20,000 barrels a day fewer than before, the cartel added.

© 2014 AFP

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