Oil prices drop as IEA sees demand growth cooling

June 12, 2015 | 09:58

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Oil prices retreated on Thursday after two days of gains as the International Energy Agency predicted that a recent surge in world crude demand was set to end.

A motorist filling up petrol at a pump kiosk. (AFP/Fadel Senna)

NEW YORK: Oil prices retreated on Thursday after two days of gains as the International Energy Agency predicted that a recent surge in world crude demand was set to end.

US benchmark West Texas Intermediate for July delivery shed 66 cents to US$60.77 a barrel on the New York Mercantile Exchange. European benchmark Brent oil for July delivery dropped 59 cents to US$65.11 a barrel in London.

In its monthly report on the oil market, the IEA lifted its 2015 demand forecast to 94 million barrels a day, 300,000 barrels per day more than the previous level. The increased forecast came after world oil demand soared in the first three months of 2015.

However, the IEA said there were "doubts" that some reasons for the pickup in demand - such as an exceptionally cold European winter in early 2015 that lifted heating demand - would repeat.

Moreover, the agency pointed to "signs of persistent oversupply" in the market in light of still-high US crude output and record production from key OPEC members.

"Oil is back under pressure as the IEA is reporting that Saudi Arabia, Iraq and the United Arab Emirates are pumping record amounts of oil into what the market feels is an oversupplied market," said Andy Lipow a Houston energy consultant.

Analysts also cited a rise in the dollar on Thursday. Oil is traded in dollars, making the commodity more expensive outside the US when the greenback is strong. Gene McGillian, broker and analyst at Tradition Energy, said some traders also took profits after oil prices rose strongly for two days.

AFP

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