Newspaper article International New York Times

Energy Agency Trims Oil-Demand Forecast ; Prices Could Keep Falling after the Fourth Cut by the Organization in 5 Months

Newspaper article International New York Times

Energy Agency Trims Oil-Demand Forecast ; Prices Could Keep Falling after the Fourth Cut by the Organization in 5 Months

Article excerpt

The International Energy Agency said that demand for oil in 2015 was likely to be 230,000 barrels per day less than previously predicted.

The International Energy Agency added to pressures on oil prices on Friday by cutting its forecast for global demand for crude oil in 2015.

The Paris-based agency said in its December oil market report that demand was likely to be 230,000 barrels per day less than previously forecast. The main reasons for the lowered forecast were less oil consumption in countries that produce it like Russia and a weaker than expected global economy.

A cut of 230,000 barrels per day is minimal in a global market of about 93 million barrels per day, but the trim, the fourth by the agency in the past five months, will probably reinforce the sentiment that supply is likely to exceed demand substantially next year.

Analysts think that a major trim in production is needed next year to avoid an inventory buildup and to stabilize falling prices, but hopes of a supply cut were dashed when OPEC declined to change its output ceilings at a meeting in Vienna at the end of last month.

The price of Brent crude fell 1.1 percent in London to $63.00 per barrel. Brent, the global standard, is down more than 40 percent since June and at its lowest level since 2009.

Olivier Jakob, an oil analyst at Petromatrix, in Zug, Switzerland, said he had expected Brent prices to fall no lower than $60 a barrel, but that now it appeared that floor might be breached. Even if market momentum carries it below $60 for a time, he said, "it would be difficult to sustain," because producers would take action, perhaps by cutting output, and some marginally profitable operations would be forced to shut down.

Mr. Jakob noted that despite the falling price, European demand had been slow to respond, in part because of the weak economy. In France, he said, November sales of petroleum products actually fell 7 percent in volume terms from a year earlier, with gasoline sales down 2.6 percent. He said that some other markets, Germany and Spain, for example, seemed to be holding up better, but overall, there was little reason to expect a major improvement soon. …

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