Oil prices drop as IEA predicts demand slowdown

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LONDON: Oil prices dropped on Thursday as the International Energy Agency (IEA) predicted that a recent surge in world crude demand was set to end.

US benchmark West Texas Intermediate for delivery in July fell 58 cents to $60.85 a barrel compared with Wednesday’s closing level.

Brent North Sea crude for July slid 46 cents to stand at $65.24 around midday in London.

World oil demand growth soared to a four-year high in the first three months of 2015, but the surge is unlikely to persist, the IEA said Thursday in its monthly report.


The strong growth, which reached 1.7 million barrels per day in the first quarter, was underpinned by an economic recovery, a European winter that was colder than the previous year’s, and lower crude prices which spurred consumption.

“However, there are doubts that this trio will persist” in the second half of 2015, said the IEA.

Heating needs are not expected to return to such levels and crude prices have also started to rise and are therefore likely to stymie demand.

Tumbling stockpiles
The market was reacting also to a mixed US energy report that showed a huge decline in crude and gasoline reserves but record-high output levels, analysts said.

The US Department of Energy’s inventory report published Wednesday showed that crude reserves fell 6.8 million barrels and gasoline supplies dropped 2.9 million barrels last week.

But output remained stubbornly high, adding 24,000 barrels to an average 9.61 million per day during the week, the highest on record.

“Prices saw an upward lift earlier because of the inventory numbers but . . . production numbers are a concern,” Ric Spooner, chief market analyst at CMC Markets in Sydney, told Agence France-Presse.

AFP

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