10 December 2014, News Wires – Brent crude oil fell more than a dollar to a new five-year low on Wednesday as producers forecast lower demand for their oil next year.
In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) forecast demand for the group’s oil will drop to 28.92 million barrels per day (bpd) in 2015, down 280,000 bpd from its previous expectation.
The price of the North Sea oil benchmark has fallen more than 40% since June as new supplies of high-quality crude from North America have fed a glut in many parts of the world.
“There is a growing realisation that the first half of next year is going to look very weak,” said Gareth Lewis-Davies, strategist at BNP Paribas. “You start to price that in now.”
Brent futures for January fell to $65.24 a barrel, their lowest since September 2009, before recovering slightly to trade around $65.39 by 1444 GMT.
US crude was down $1.69 at $62.13, having fallen $1.85 to $61.97 in early New York trading, its lowest since July 2009.
Trader and miner Glencore said on Wednesday there was a “good chance” oil prices would continue to fall. Oil chief Alex Beard said production levels were unlikely to change over the next six to nine months.
Data from the American Petroleum Institute (API) on Tuesday showed U.S. crude oil inventories rose 4.4 million barrels last week to 377.4 million barrels. Analysts had forecast a drop of 2.2 million barrels.
US gasoline and distillate stocks also showed big builds, the API said.
“Almost all the news flow points to a weaker market,” said Carsten Fritsch, oil analyst at Commerzbank in Frankfurt.
“We have had very bearish API data with large stock builds across the board, and also a very bearish Short-Term Energy Outlook from the EIA, with a sharp reduction in demand growth forecasts for next year.”
OPEC members are divided on how to respond to the global surplus and falling prices. The cartel may still hold an emergency meeting before its June gathering, Algeria’s energy minister said on Tuesday.
Italian oil and energy group Eni said OPEC may cut output in the spring and that oil prices will remain between $66 and $75 per barrel next year.
Top oil producer Saudi Arabia blocked production cuts at OPEC’s meeting in November and has taken steps to shore up its market share.