Oil down on weak demand forecasts, recovery doubts

11/02/2009

Crude prices fell yesterday (February 10th) despite the US senate's approval an $838 billion (£581 billion) economic stimulus package.

The attitude on the New York Mercantile Exchange remained markedly bearish as the Energy Information Administration (EIA) revised its oil demand forecast for the coming year.

The group announced yesterday that it expected that demand for crude - and derivatives such as heating oil, DERV and petrol - will fall by 1.17 million barrels of oil a day this year when compared to average daily usage in 2008.

"It's not surprising to me that the EIA and other analysts who look at these markets are constantly revising downward their demand figures - and that would of course be adding pressure to the downside," said Addison Armstrong, director of market research for Tradition Energy, speaking to Reuters.

While crude had dropped below the $38-a-barrel mark by the close of trading yesterday, it has rebounded partly today.

By 5:39 Eastern Time, light, sweet oil for March delivery had risen 55 cents to $38.10 a barrel.