Oil dips for 5th day; demand to hit record high in 2010

By David Sheppard

LONDON (BestGrowthStock) – Oil fell for a fifth straight session to below $84 on Tuesday, almost erasing April’s gains, as a forecast increase in U.S. crude stocks highlighted rising supplies and weak demand in the world’s largest energy consumer.

But prices were supported by the latest forecast from the International Energy Agency (IEA) that predicts world demand will rebound this year to hit its highest ever annual level.

U.S. crude oil for May delivery slid 49 cents to $83.85 a barrel by 1104 GMT, down 4 percent from an 18-month high of $87.09 hit last week.

Brent crude oil, the benchmark for the Atlantic basin and most of Europe, Africa and Asia, held the premium gained over U.S. crude on Monday for the first time this year, but dipped by 7 cents to $84.70 a barrel.

“The market is turning back into consolidation mode,” Credit Suisse analyst Stefan Graber said.

“There have been fundamental improvements, but the last two weeks have not really shown that much improvement to warrant the strong move higher. There is not a lot of fresh impulse to push prices further.”

U.S. crude inventories probably rose for the 11th straight week, a Reuters survey showed ahead of an industry report later on Tuesday, climbing by 1.6 million barrels in the seven days to April 9. Supplies of distillates, including heating oil and diesel are predicted to have climbed 1 million barrels, though gasoline stocks were expected to have fallen by 700,000 barrels.


While crude oil stockpiles have been mounting in the United States, global oil demand is still expected to rebound sharply this year after falling since its previous peak in 2007.

The IEA said on Tuesday average global oil demand will hit a record high of 86.6 million barrels per day (bpd) in 2010, as rapid growth of 1.67 million bpd wipes out two years of falling consumption caused by higher prices and the economic crisis.

The Paris-based adviser to 28 industrialized nations raised its demand forecast by 100,000 bpd from its previous estimate, though high stock levels and rising output from OPEC members and other countries is expected to keep the market relatively well balanced in the coming months.

“There are signs of oil demand picking up in North America and the Pacific, Asia and the Middle East although consumption in Europe still looks weak,” David Fyfe, head of the IEA’s Oil Industry and Markets Division, told Reuters.

The agency’s monthly oil market report details the shifting balance in world oil consumption between the developed world and emerging nations.

While members of the Organization for Economic Co-operation and Development (OECD) have seen their total oil consumption fall by 5.1 million bpd since 2006 to 45.4 million bpd, rapid growth in nations like China and India has seen non-OECD demand soar by 5.5 million bpd to 41.2 million bpd over the same period.

A Reuters survey ahead of China’s publication of its latest GDP data on Thursday showed the Asian powerhouse’s economy probably grew 11.5 percent in the first quarter. That would be the fastest year-on-year growth since the third quarter of 2007.

Investing Analysis

(Additional reporting by Alejandro Barbajosa and Wang Tao in Singapore; Editing by Amanda Cooper and Sue Thomas)

Oil dips for 5th day; demand to hit record high in 2010