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Oil prices drop after IEA scales back demand forecast

13 April 2009 08:02 (UTC +04:00)

Bakuâ€“ APA-Economics. Crude oil fell in New York after the International Energy Agency said 2009 demand may slump to the lowest in five years as factories shut and car sales tumble amid a deepening global recession, Bloomberg reported.

Oil consumption will fall 2.4 million barrels a day this year, about the same amount that Iraq produces, to 83.4 million barrels a day, the IEA said on April 10 as trading in New York and London was closed for the Good Friday holiday.

U.S. crude supplies are at their highest since July 1993, the Energy Department said on April 8. Crude oil fell as much as 86 cents, or 1.7 percent, to $51.38 a barrel in electronic trading on the New York Mercantile Exchange.

Oil futures fell 0.5 percent last week, snapping seven weeks of gains. Crude has risen 16 percent this year, after tumbling 54 percent in 2008.

Brent crude oil for May settlement fell as much as 41 cents, or 0.8 percent, to $53.65 a barrel on Londonâ€™s ICE Futures Europe exchange.

Brent is trading at a premium of more than $2 a barrel to the West Texas Intermediate contract in New York, swinging from a discount of 43 cents on March 31.

Oil demand will shrink by 2.8 percent this year as worldwide gross domestic product declines by 1.4 percent, according to the IEA, the adviser to 28 consuming countries. The organization had until now assumed the global economy would expand in 2009.

The decline outpaces supply from the Organization of Petroleum Exporting Countriesâ€™ third-largest producer, Iraq, which last month pumped 2.27 million barrels a day.