MW: Oil falls below $59 a barrel on concerns over weak demand
Crude futures are on track for their biggest weekly loss since early January
NEW YORK (MarketWatch) -- Oil futures fell below $59 a barrel on Friday, as the International Energy Agency left its outlook for global oil demand this year effectively unchanged, dimming hopes of a swift recovery.
Light sweet crude for August delivery dropped $1.56, or 2.5%, to $58.86 a barrel in electronic trading on Globex.
Crude prices were lower "after a downbeat IEA report for 2009 and on continued market concerns over the state of the global economy," said Nimit Khamar, analyst at Sucden Financial Research.
Oil futures have tumbled 12% this week and are poised for their biggest weekly loss since the week ended January 9.
Global oil demand is expected to be 83.8 million barrels a day this year, which represents an annual contraction of 2.9%, or 2.5 million barrels a day, the IEA said Friday in its monthly report.
This forecast is effectively unchanged given much weaker-than-anticipated data from the OECD economies, the IEA said.
On the brighter side, the IEA expects 2010 demand to rise by 1.7%, or 1.4 million barrels of oil a day, to 85.2 million barrels a day. "This strong rebound is led by non-OECD countries, but the OECD should also post a modest recovery," the agency said.
The Organization for Economic Cooperation and Development (OECD) represents the world's 30 largest industrial economies, including the United States, Germany, and Japan. The OECD doesn't include major developing economies such as China and India.
"We think next week's tone will be slanted again towards the downside, especially if the macro numbers released from a rather heavy U.S. calendar come out to be either in-line, or only slightly better than expected," said Edward Meir, analyst at MF Global.
"We say this because it seems that investors are now demanding to see more robust upside surprises in macro data before going long, and are no longer content with seeing numbers showing an economy just bumping along the bottom," Meir said in a note to clients.
Also on Globex, August reformulated gasoline fell 2 cents to $1.64 a gallon and August heating oil dropped 3 cents to $1.51 a gallon.
August natural gas futures fell 6 cents to $3.35 per million British thermal units.
