Oil prices drop on demand worries

GLOBAL oil prices have dived on concerns about weakening global demand after the IEA lowered its 2013 consumption forecast.

New York's main contract, West Texas Intermediate (WTI) for May delivery, closed at $US93.51 a barrel on Thursday, a loss of $US1.13.

In London trade, Brent North Sea crude for delivery in May dropped $US1.52 to settle at $US104.27 a barrel.

"The latest monthly report from the IEA falls in line with reports released in recent days by OPEC and the EIA by showing a marginal downward revision to oil demand growth for this year," said Matt Smith of Schneider Electric.

The International Energy Agency projected global oil demand for oil would grow by 795,000 barrels per day to a total of 90.6 million barrels a day in 2013, slightly lower than its previous outlook, as a decline in Europe partially offset growth elsewhere.

On Wednesday, the Organisation of Petroleum Exporting Countries (OPEC) also lowered its forecast.

US oil prices had rallied on Wednesday after the US Energy Information Administration report showed a smaller-than-expected increase in oil stocks in top consumer the United States.

The EIA said US crude reserves grew by 250,000 barrels in the week ending April 5, pushing US commercial stocks to 388.9 million barrels, not far from the all-time record of 391.9 million barrels in July 1990.

Sucden analyst Myrto Sokou said the oil market was hit this week by "renewed concerns about oil consumption".

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Oil prices fall on demand worries

OIL prices fell Wednesday after another build in US crude inventories and a lowered key oil demand forecast took the shine off better-than-expected US retail sales.

New York's main contract, West Texas Intermediate (WTI) for April delivery, closed essentially flat at $92.52 a barrel, down two cents from Tuesday's closing level.

Brent North Sea crude for April dropped $1.13 to settle at $108.52 a barrel in London trade.

The New York session began sharply higher after official data showed US retail sales picked up 1.1 percent in February, the biggest gain in five months and more than double expectations, though higher gasoline prices accounted for an important part of the surge.

Even so, it sparked hopes of continuing strong consumer spending in the US economy.

"That helped a lot with the market," said Bill Baruch of iiTrader.com.

But the benchmark New York contract began to fall after the US Department of Energy's weekly report showed another increase in crude inventories, by 2.6 million barrels, in the week ended March 8.

A downbeat demand forecast also weighed on market sentiment.

The International Energy Agency (IEA) lowered its global forecast for growth in world oil demand for the second straight month, citing the effects of uncertainty from the US budget talks, sluggish Chinese business activity and unemployment in Europe.

The IEA estimated that demand for oil would total 90.6 million barrels per day this year, a cut of 60,000 barrels from its forecast in February.

"The macroeconomic environment underpinning oil demand, as of yet, shows little sign of short-term improvement," it said in a report.

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