Oil prices plunge to new eight-month low
LONDON - Brent oil prices plunged Friday to a new eight-month low, driven by the stronger dollar and weak crude market outlook following a raft of demand forecast downgrades, analysts said.
In earlier morning deals, Brent North Sea crude for delivery in May slid to $102.77 per barrel, which was the lowest level since July 2012. It later pulled back to $103.05, down $1.22 from Thursday.
New York's main contract, West Texas Intermediate (WTI) light sweet crude for May shed $1.05 to stand at $94.46 a barrel.
"The sentiment is generally bearish, aided by technical selling ... and we have a decent dollar rebound today to top it all," VTB Capital analyst Andrey Kryuchenkov said. The stronger greenback makes dollar-priced oil more expensive for buyers using other currencies, which weighs on demand.
The oil market was also hit this week by demand forecast downgrades for 2013 from the Organisation of Petroleum Exporting Countries (OPEC), the International Energy Agency (IEA) and the US government's Energy Information Administration.
"All major forecasters painted a similar picture of plentiful supplies and sluggish demand," said Kryuchenkov.
Crude futures fell Thursday after the Paris-based IEA projected that global oil demand would grow by 795,000 barrels per day to a total of 90.6 million barrels a day in 2013.
The figure is slightly lower than its previous outlook, as a decline in European demand partially offset growth elsewhere, the agency said.
"Perhaps the most significant element of all three reports has been demand pessimism, implying doubts about global GDP (economic) growth this year," noted PVM oil analyst David Hufton.
"OPEC forecasts that global demand will grow by 800,000 barrels per day (bpd) this year and the IEA is of the same opinion.
He added: "The IEA believes that European oil demand is particularly weak suggesting that this year it will be 'the lowest since the 1980s'.
"Hence oil prices retreated yesterday in the face of all of this demand pessimism."
Sucden analyst Myrto Sokou added that the oil market was hit this week by "renewed concerns about oil consumption".
Oil prices had already fallen heavily last week as poor economic data and abundant supplies stoked concern about the strength of demand in top global crude consumer the United States.