Brent futures edged further below $106 per barrel today as key forecasters trimmed their outlook for global oil demand growth, while an inventory buildup in top consumer the United States also hurt prices.
The Organization of Petroleum Exporting Countries lowered its projection for growth in 2013 oil demand yesterday, after a similar downward revision by the US Energy Information Administration earlier this week, reviving concerns the global economic recovery may be shakier than investors earlier thought.
The third closely watched oil forecaster, the International Energy Agency, updates its outlook today.
"Everyone is readjusting their portfolio for weaker demand and we're also seeing significant revision of demand forecasts," said Jonathan Barratt, chief executive of BarrattBulletin, a Sydney-based commodity research firm.
"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 has helped oil prices come off eight-month lows.
Brent futures fell 23 cents to $105.56 per barrel by 05.57 GMT. 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 it expects world oil demand to rise by 800,000 barrels per day (bpd) 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.
Those fears have been highlighted by recent data showing American employers hired far fewer staff in March than even the gloomiest predictions and business surveys from the euro zone confirming recession there was dragging on.
But oil prices gained earlier this week on hopes 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 have successfully engineered its rebound.
US prices remained under pressure after crude inventories rose to the third-highest level on record, according to data released by the EIA.
"Crude builds should be expected at this time of year when refinery maintenance is seasonally elevated, resulting in suppressed crude use at refineries," BNP Paribas analysts said in a report. "But the situation has been made worse by continuing strong growth in domestic crude supply."
Reuters
