11 April 2013, News Wires – Brent futures edged further below $106 per barrel on Thursday as key forecasters trimmed their outlook for global oil demand growth, while an inventory build-up in top consumer, the US, also hurt prices.
Opec lowered its projection for growth in 2013 oil demand on Wednesday, after a similar downward revision by the US Energy Information Administration (EIA) earlier this week, reviving concerns that the global economic recovery could be shakier than investors previously thought, Reuters said.
The third closely watched oil forecaster, the International Energy Agency, updates its outlook on Thursday.
“Everyone is readjusting their portfolio for weaker demand and we’re also seeing significant revision of demand forecasts,” Sydney-based commodity research firm Barratt Bulletin’s chief executive, Jonathan Barratt, told Reuters.
“It seems logical to suggest that the support (in recent sessions) is the result of the stimulus, but prices will fundamentally remain under pressure,” he said, referring to Japan’s ambitious monetary easing policy announced last week that helped oil prices come off eight-month lows.
Brent futures fell 17 cents to $105.62 per barrel by Thursday morning. They hit $103.40 on Monday, the weakest since July on disappointing US jobs data.
US crude futures fell 27 cents to 94.37 per barrel, after three straight sessions of gains.
Opec said on Wednesday that it expected world oil demand to rise by 800,000 barrels per day this year – a cut of 40,000 bpd from the previous estimate. It cited weaker-than-expected oil use in developed economies, particularly Europe and Japan.
The lower forecasts by Opec, coming a day after a similar move by EIA, stoked concerns of a shaky economic recovery.
According to Reuters, those fears were highlighted by recent data showing US employers hired far fewer staff in March than even the gloomiest predictions and business surveys from the euro zone, confirming the recession there was dragging on.
However, oil prices gained earlier this week on the hope that a strengthening recovery in China, the world’s biggest energy consumer, might offset weakness elsewhere.
Inflation in China softened in March while imports and exports grew in double digits and bank loans surged, suggesting that policymakers had successfully engineered its rebound.
US prices remained under pressure after crude inventories rose to the third-highest level on record, according to EIA data.
Even so, the rise of 250,000 barrels in the week to 5 April was far below the 1.4 million barrels forecast by analysts in a Reuters poll. That, combined with expectations of a seasonal pickup in demand as the warm weather driving season gets underway, could reduce some of the pressure, analysts said.
According to Reuters, prices may also be supported by geopolitical tensions as North Korea appeared to be close to launching a medium-range missile as a show of strength, a move that is seen as a threat by neighbour South Korea and its ally, the US.