Oil holds above eight-month low

Top forecasters cut 2013 oil demand growth estimates as US jobs data and oil supply worries may support prices

The world's top oil forecasters this week all cut their 2013 oil demand forecasts due to subdued economic growth, but warned of lingering supply risks. Photograph: Reuters/Shannon Stapleton

The world's top oil forecasters this week all cut their 2013 oil demand forecasts due to subdued economic growth, but warned of lingering supply risks. Photograph: Reuters/Shannon Stapleton

Fri, Apr 12, 2013, 08:23

Brent crude held above $104 (€79.43) per barrel this morning, not far from an eight-month low on concerns over global demand growth, although an improvement in US jobs data and worries over supply should help support prices.

The world's top oil forecasters this week all cut their 2013 oil demand forecasts due to subdued economic growth, but warned of lingering supply risks. A fall in the number of Americans filing for new unemployment benefits revived risk appetite, pushing US shares up for a fourth day and supporting oil.

Brent crude traded 5 cents higher at $104.32 a barrel this morning, after settling $1.52 lower. The contract slipped to a low of $103.40 earlier this week, the weakest since July 25th 2012. US oil slipped 27 cents to $93.24, after ending well below its 50-day moving average of $94.33.

The International Energy Agency (IEA) on Thursday trimmed its global oil demand growth estimate, which followed similar moves by the US Energy Information Administration (EIA) and the Organization of the Petroleum Exporting Countries (OPEC).

World oil use will rise by 795,000 barrels per day (bpd) this year, Paris-based IEA said in its monthly report. That is 25,000 bpd less than it estimated last month and a third straight reduction.

The IEA now has virtually the same view on demand as OPEC, which in a report on Wednesday lowered its consumption growth forecast to 800,000 bpd. The EIA on Tuesday lowered its estimate by 50,000 bpd to 960,000 bpd.

Investors drew comfort from US jobs data, which helped ease fears of a marked deterioration in labour market conditions after a surprise stumble in job growth in March.

Initial claims for state unemployment benefits dropped 42,000 to a seasonally adjusted 346,000, the Labour Department said yesterday, unwinding the jump in the prior week related to difficulties adjusting the data for seasonal variations. That was the largest weekly drop since mid-November.

Reuters