Oil Prices Fall Due to Lower Demand

The price of oil fell to almost $92 a barrel on Friday. Experts say lukewarm forecasts and less demand for ample supplies may have contributed to the dip in price.

Similarly, Brent crude was down by $1.44 to $102.83 a barrel on the ICE Futures exchange in London. Brent has dropped about 12 percent in the past two months amid Europe’s ongoing financial crisis, increased supplies, and tepid forecasts for demand.

These developments follow news from Thursday that the Nymex contract dropped $1.13 when the International Energy Agency lowered its forecast for global oil demand in 2013 to 90.6 million barrels a day. Its predictions were similar to those made earlier this week by OPEC and the U.S. Energy Department.

Michael Hewson of CMC Markets commented, “Concerns about European demand continue to weigh on the oil price. U.S. inventories at their highest levels in years and the IEA lowering its forecasts for oil demand are pushing prices lower.”

On the other hand, experts say they expect global demand for crude to strengthen in the second half of the year, which should lead to higher prices. Analysts at JBC Energy in Vienna note that demand in financially troubled countries like Spain and Italy has hit a low point and has begun to edge up.

Global oil demand this year is forecasted to exceed last year’s levels by 500,000 barrels a day during the first half of the year and by 1.9 million barrels a day in the second half.

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