Oil trades flat as IEA cuts oil demand forecast

Apr.11, 2008 in Market Outlook

Oil trades flat, as IEA cuts oil demand forecast

By Polya Lesova, MarketWatch

Last Update: 9:07 AM ET Apr 11, 2008

NEW YORK (MarketWatch) — Crude-oil futures traded little changed Friday, as the
International Energy Agency slashed its oil demand estimate for this year,
reflecting the deteriorating outlook for global economic growth.

Crude oil for June delivery fell 8 cents to $110.03 a barrel in early electronic
trading.

“We do not see energy markets decoupling from the important dollar relationship
anytime soon, and since dollar rallies are inevitably being sold into these days,
we suspect that energy prices will, in turn, get bid up as a response,” said
Edward Meir, an analyst at MF Global, in a research note.

Although right now energy’s uninspiring fundamental backdrop is not registering
with market participants, it eventually will, especially if the macro picture
continues to deteriorate, Meir said.

On Thursday, crude futures fell 76 cents, or 0.7%, to end at $110.11 a barrel.

IEA cuts estimate of 2008 oil demand

The International Energy Agency on Friday cut its estimate of 2008 global oil
product demand on the diminished prospects for world economic growth, but said
oil prices may not decline due to worries about supplies. Read more.
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The IEA cut its 2008 world demand estimate to 87.2 million barrels of oil a day,
down 310,000 barrels from the last monthly report. It revised higher its view of
2007 global oil demand by 140,000 barrels to 86 million barrels of oil a day.

The new 2008 forecast is due to the lowered GDP forecast from the International
Monetary Fund, as well as a new way of measuring demand in the former Soviet
Union and other data changes.

On the currency markets, the U.S. dollar fell against most major counterparts,
with traders showing little expectation that Group of Seven finance ministers and
central bankers will come up with anything this weekend to underpin the currency.

The dollar index, which tracks the performance of the greenback against a basket
of currencies, dropped 0.5% to 71.76. See Currencies.
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Efforts to come up with an answer to a pernicious and surprisingly persistent
credit crisis will be the top job during the Group of Seven industrial nations
gathering in Washington Friday. Read more.
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