17 Jan 2009

World oil prices rebound

12:21 pm on 17 January 2009

Oil prices rebounded on Friday as the market tossed between worries over OPEC production cuts and the International Energy Agency's unexpectedly sharp reduction in global demand forecasts.

New York's main contract, light sweet crude for delivery in February, rose $US1.11 to close at $US36.51 a barrel on the New York Mercantile Exchange.

Brent North Sea crude for March delivery was unchanged to settle at $US46.57 per barrel on London's InterContinental Exchange.

Prices had tumbled Thursday on worries over sagging economies, rising US energy stockpiles and a new OPEC forecast of falling demand for 2009.

On Friday, the International Energy Agency followed suit, lowering its oil demand forecasts.

The IEA said the market faced its first two-year contraction in demand since 1982 and 1983.

The energy watchdog added that it wanted to anticipate sharp downward revisions to global economic growth forecasts and so had halved its own growth estimate to just 1.2% "given the worsening outlook".

Accordingly, it cut its projection for 2009 oil demand by 1 million barrels per day to 85.3 million barrels a day, representing a fall of 0.6% from revised 2008 figures.