World Bank puts brakes on oil price surge

22/06/2009

Crude has continued to move downwards in early trade in New York this morning, weighed upon by a report from the World Bank anticipating a deeper than expected recession.

The report predicts that the global economy will shrink by 2.9 per cent this year, with demand for crude and distillates such as petrol, DERV and heating oil likely to suffer as a result.

Speaking to Bloomberg, Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt, said that oil prices have moved away from fundamentals.

"It seems like the correction is under way. Demand is not really recovering and despite all the geopolitical noise, we still have over-production," he said.

Prices rose last week as investors became concerned about the stability of oil supply from Nigeria.

The country has been embroiled in intense skirmishes with rebel groups in the Niger Delta region in recent weeks.

Last week, Shell confirmed that a major pipeline had been destroyed by the Movement for the Emancipation of the Niger Delta, the main rebel group.