MW: Crude lower on prospects that demand has further to fall
Crude-oil futures fell Friday, extending their weekly losses to more than 2%, on worries that there won't be a swift recovery in the global economy and that energy demand will fall further.
Energy futures trended broadly lower.
Crude for June delivery surrendered $1.11, or 1.9%, to stand at $57.51 a barrel in early North American trading. This would put the benchmark contract down 2.1% for the week.
On Thursday, the International Energy Agency forecast in its monthly report that world oil demand will suffer the biggest drop this year since 1981.
The IEA said it now expects demand to fall by 2.6 million barrels a day from 2008 levels. This would be 200,000 barrels more than the IEA had projected a month ago, according to the agency's monthly report.
The IEA also said the Organization of Petroleum Exporting Countries ratcheted up oil production in April, the first month in eight in which the cartel has increased output.
"Rising oil prices increase the incentive to expand production at the expense of other oil producers, in order to benefit from higher oil prices," said analysts led by Barbara Lambrecht at Commerzbank.
"A weaker demand and higher OPEC supply may explain why oil stocks have been rising until recently," they added. "This also confirms our conviction that the oil price increase during the last weeks was overdone and a price correction toward $55 a barrel had to be expected."
Also in energy trading, June-reformulated gasoline skidded 2.69 cents, or 1.6%, to $1.6968 a gallon, and June heating oil lost 3.62 cents, or 2.4% to $1.4585 a gallon
Natural gas for June delivery also dropped, giving up 7.2 cents, or 1.7%, to $4.22 per million British thermal units.
