DRIVERS and businesses will use a little less fuel than previously thought this year, and that hurt international crude prices yesterday.
Brent crude, which is used to price many international oil varieties, fell 52 cents to end at US$112.25 a barrel in London.
Prices fell after the Organization of Petroleum Exporting Countries sharply cut its forecast for world oil demand, saying it saw slower economic growth "in almost every major economy."
The 12-nation group expects global oil consumption to average 88 million barrels a day in 2011, about 140,000 barrels a day fewer than it forecast earlier. Demand in 2012 is expected to average 89.3 million barrels per day, or 180,000 barrels fewer.
"The global economy is losing momentum," OPEC said in its monthly forecast for oil demand.
One big area of concern remains Europe. The European Commission said that Greece's budget shortfall will be more than expected, increasing fears of a sustained slowdown in the region. Greece's deficit as a percentage of national income is now expected to hit 9.5 percent, up from an earlier estimate of 7.6 percent.
European Central Bank chief Jean-Claude Trichet said European bankers are watching Greece's situation closely. Trichet, who spoke to reporters in Switzerland, added that the global economy doesn't appear to be headed for another recession.
Overall global demand remains strong and consumption, even at slightly lower levels, could reach a record high this year. That could keep prices oil prices from tumbling.
Andrew Lebow, a senior vice president and oil broker at MF Global, noted that the growing energy needs of China, India and other developing nations will offset weak demand in the industrialized world.
"No one is predicting that oil demand will shrink," Lebow said.
Even with the drop in OPEC's forecast, the cartel still predicts that more oil will be consumed this year than ever before.
While the US, western Europe and Japan cut back on oil, China will expand consumption by 6 percent this year, followed by increases of more than 2 percent in Asia, Latin America and the Middle East, OPEC said.
In the US, benchmark West Texas Intermediate crude rose 95 cents to finish at US$88.19 per barrel in New York.
In other commodities trading, heating oil lost 3.83 cents to end at US$2.9475 per gallon while gasoline futures fell 3.28 cents to US$2.7382 per gallon. Natural gas fell 3 cents to finish at US$3.885 per 1,000 cubic feet.
Source:shanghaidaily