MW: Oil retreats as IEA report raises demand concerns
Natural-gas futures set for 20-month high after supply decline
By Myra P. Saefong and Michael Kitchen, MarketWatch
SAN FRANCISCO (MarketWatch) — Oil futures traded lower on Thursday, ready to log their first loss in four sessions after the International Agency reported a modest cut to its forecast for growth in oil demand.
Natural-gas futures, meanwhile, were set to mark their highest close in 20 months amid a decline in late heating-season stockpiles in the U.S.
May crude oil CLK3 -1.38% lost 49 cents, or 0.5%, to $94.15 a barrel on the New York Mercantile Exchange, set to give back Wednesday’s 44-cent gain. Prices have tallied a climb of 2.1% over the past three sessions.
London-traded benchmark Brent crude saw its May contract UK:LCOK3 -1.34% decline by 70 cents, or 0.7%, to $105.09 a barrel on ICE Futures after a 44-cent fall in the previous session.
Thursday’s losses came as the International Energy Agency cut its outlook for global oil-demand growth to 795,000 barrels a day from a previous forecast of 820,000 barrels a day, adding to existing worries that demand is fading.
The forecast cut reflected weak demand from industrialized countries and in particular Europe, where consumption in 2013 is expected to be the lowest since the 1980s.
Matthew Parry, senior oil market analyst at the IEA and author of the report, told MarketWatch that he has essentially left the 2013 demand forecast unchanged.
“The media headlines are all about how I’ve reduced this forecast,” but there’s no mention of how this is just 0.05% of demand, he said.
“We still have a relatively bearish supply-demand balance for the rest of the year,” Parry said. “However, ongoing geopolitical concerns will likely continue to remain a theme of the market in 2013.”
The IEA report also highlights falling OPEC output and a further decline in Iranian exports, but it referred to global demand as being “subdued.”
Oil production from the Organization of the Petroleum Exporting Countries fell by 170,000 barrels per day in March from a month earlier to 30.25 million barrels per day, according to a Platts survey of OPEC and oil industry officials and analysts released Wednesday.
The IEA said it “may be too early to call a bear market and there are signs that some of the recent easing of upward price pressures could be short-lived.”
Analysts at the Kilduff Report said they “remain constructive on oil prices, believing that the Asian demand will remain strong and Saudi resolve to lower production ... [will] keep oil prices out of a bear market.”
The IEA’s report came just a day after OPEC reduced its global oil-demand forecast.
