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Business & Technology

Oil falls to below $96 per barrel

May 12th, 2012 3:44 am by Associated Press

Oil prices fell below $96 a barrel Friday amid concern global crude demand will grow less this year than previously expected.

By early afternoon in Europe, benchmark oil for June delivery was down $1.12 to $95.96 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 27 cents to settle at $97.08 in New York on Thursday.

In London, Brent crude was down 87 cents at $111.86 per barrel on the ICE Futures exchange.

Crude has slumped about 10 percent from $106 last week as traders mull signs the economies of the U.S., Europe and China are slowing. Analysts are also eyeing rising U.S. crude inventories, which rose last week to a 22-year high while OPEC, led by Saudi Arabia, increased oil production by 320,000 barrels per day in April, according to Platts, the energy-information arm of Mc-Graw-Hill Cos.

“The energy market is vulnerable to additional negative guidance from the U.S. economy, a slowing in the Chinese economic growth engine and a renewed heightening in European debt worries,” energy trader and consultant Ritterbusch and Associates said in a report.

Despite the higher output from OPEC and the rising crude stockpiles, the International Energy Agency predicted oil prices would probably remain elevated.

The IEA raised slightly its estimate of global demand to 90 million barrels a day for 2012 — 80,000 barrels a day more than its previous prediction — driven mainly by the upward revisions to the IMF’s growth forecast.

The IMF expects the world economy to expand by 3.5 percent in 2012 and by 4.1 percent in 2013, while in January it was predicting growth of 3.3 percent this year and 4.0percent in 2013.

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