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OPEC CUTS DEMAND FORECAST

Oil sinks below $63 to lowest in more than 5 years

LONDON, December 12, 2014

Brent crude oil slipped on Friday to below $63 a barrel, its lowest since July 2009, dragged down by persistent concerns over a global supply glut and a sluggish demand outlook.

Brent is down roughly nine per cent this week, some 45 per cent below its June peak above $115 per barrel.

Oil prices will likely come under further downward pressure, the International Energy Agency said as it cut its outlook for demand growth in 2015 and predicted that healthy non-Opec supply gains were poised to aggravate the glut.

The agency, which coordinates the energy policies of industrialised countries, cut its outlook for global oil demand growth for 2015 by 230,000 barrels per day (bpd) to 0.9 million bpd on expectations for lower fuel consumption in Russia and other oil-exporting countries.

The Organization of the Petroleum Exporting Countries (Opec), which accounts for a third of global oil output, cut its 2015 demand forecast this week to the lowest in more than a decade.

"It's following the trend lower. The market has reacted strongly to the Opec forecast cut, and it is focusing only on the negative," said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam.

He added that there was little technical support until the $50-55 level.

Brent crude was down 85 cents at $62.83 per barrel by 0922 GMT.

US crude was down $1.04 at $58.90 a barrel, after falling to a low of $58.80, also the weakest since July 2009. The contract has lost about 10 per cent this week.

Top energy consumer China released data on Friday showing near-record refinery runs in November, with factory output growth weaker than expected.

High Chinese oil demand, which has remained above 10 million barrels per day for the past three months, could help provide a floor for prices.

Remarks by Saudi Arabia's oil minister reiterating that the kingdom will not cut output, and a surprise jump in US crude and distillate inventories, have driven down oil prices this week.

Opec exporters are locked in a battle for market share. Kuwait has set the official selling price for crude sales to Asian buyers for January at $3.95 a barrel below the average of Oman/Dubai quotes, a trader said, its lowest since December 2008.

The market outlook is uncertain, with some traders speculating that other Opec members, such as Algeria and Venezuela, may convince the group to hold an emergency meeting early next year. Others doubt that Saudi Arabia would agree to production cuts even if such a meeting were held. - Reuters




Tags: Oil | Brent | Crude | Supply | demand |

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