Forecasts of oil demand dip on weaker growth

Brent crude, a benchmark for U.S. gasoline prices, fell to the lowest point in more than two years Thursday after the International Energy Agency cut global oil demand forecasts because of weaker economic growth.

Oil demand estimates for this year and next were cut following a secondquarter slowdown that prompted Saudi Arabia to pare exports to a threeyear low. Brent is a European crude often used by U.S. gasoline refineries to set prices.

“The economy is going to struggle and that’s bad news for oil demand,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “There is economic uncertainty around the world.”

Brent for October settlement dropped $1 to $97.04 a barrel on the London-based ICE Futures Europe exchange after sliding to $96.72, the lowest since July 2, 2012.

West Texas Intermediate for October delivery — WTI is the benchmark for U. S. crude — rose 2 cents to $91.69 a barrel on the New York Mercantile Exchange. The contract earlier dipped to $90.43, the lowest since May 1, 2013.

Paris-based IEA cut its projection for demand growth in 2014 by 150,000 barrels a day because of weaker performance in China and Europe, forecasting that worldwide consumption will expand by 900,000 barrels a day to average 92.6 million.

Global demand will increase by 1.2 million barrels a day, or 1.3 percent, to 93.8 million next year. The expansion is 165,000 barrels a day less than it predicted a month ago.

Saudi Arabia, biggest member of the Organization of Petroleum Exporting Countries, cut production by 330,000 barrels a day to 9.68 million a day in August, according to the IEA. The nation exported 6.95 million barrels a day in June.

Output from OPEC’s 12 members slipped by 130,000 barrels a day in August to 30.3 million as lower production from Saudi Arabia and Iraq countered a recovery in Libya, according to the report.

“Oil prices continue their nosedive,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in a report. “OPEC already appears to be responding to the threat of oversupply. All the same, further cuts would need to be made by OPEC in order to balance the oil market.”

Oil prices “always fluctuate, and this is normal,” Ali al-Naimi, Saudi Arabia’s oil minister, told reporters in Kuwait Thursday.