Friday, October 12 12:22:26
Oil fell below $115 a barrel on Friday, as a prediction of a further decline in oil consumption and higher supplies offset concerns about potential output disruptions in the Middle East.
The International Energy Agency (IEA) said ample supply from North America and Iraq coupled with declining global demand could lead to an easing of oil prices over the next five years.
Brent crude had fallen 75 cents to $114.96 a barrel by 1055 GMT. U.S. crude was down 2 cents at $92.05.
The IEA cut its global oil demand growth projection for 2011-2016 by 500,000 barrels per day (bpd) compared to its previous report, easing the pressure on OPEC to produce more oil.
It also cut its 2013 global oil demand projection by 100,000 bpd to 90.48 million bpd, citing lower consumption in Europe, the Americas and China.
"It seems like the market has reacted on the negative side. Crude oil prices reversed from yesterday's gains amid concerns over confirmation of the global oil demand growth," said Myrto Sokou, a senior research analyst at Sucden Financial.
"The bearish IEA figures set the tone for the day so we can expect further declines for today's trading session," Sokou said.
Oil major BP Plc has secured U.S. government permission to ship U.S. crude oil to Canada, and Royal Dutch Shell has applied for an export license, as rising production in the world's top oil consumer upends global energy flows.
"This will significantly alter the oil market dynamics in the coming years as U.S. crude imports are expected to decline and exports to rise," said Ryoma Furumi, a commodity sales manager at Newedge Japan.
But geopolitical risks, lower output in the North Sea due to maintenance and a supply crunch in oil products are propping up oil prices in the face of dwindling global fuel demand.
More than a week of rising tension between Turkey and Syria has stoked fears over potential disruption of oil supply from the region. The port of Ceyhan, through which more than 400,000 barrels per day of Iraqi crude flows, is on the Turkish Mediterranean coast.
Syria accused Turkey of "air piracy" on Thursday after Ankara grounded a Damascus-bound passenger plane it said was carrying munitions.
"At current oil prices, it will not be domestic demand that will lead oil prices higher on a sustained basis but lack of supply," said Olivier Jakob, at Petromatrix in Switzerland.
"This means that we are heading towards a period of greater volatility, because when and if the fears on supply disappear there will not be the support of demand," he said.
Distillate stocks in the United States fell sharply last week and figures on Thursday showed gasoil stocks independently held in the Amsterdam-Rotterdam-Antwerp hub fell almost 4 percent week-on-week.
"ARA gasoil stocks in Western Europe are at their lowest level for nearly a year," Commerzbank said in a note. "Distillate prices are therefore likely to rise further ahead of the heating season."
(C ) Reuters