Oil prices fall after IEA slashes 2009 energy demand forecast

LONDON: World oil prices slid on Thursday after the International Energy Agency cut its energy demand forecast for 2009 because of the worldwide economic downturn.

Prices also continued to fall from recent six-month peaks as Wednesday's poor US retail sales data and weak equities poured cold water on hopes of a global economic recovery, analysts said.

New York's main futures contract, light sweet crude for delivery in June, lost 94 cents to 57.08 dollars a barrel.

London's Brent North Sea crude for June delivery sank 76 cents to 56.58 dollars a barrel.

"Energy prices are off (on Thursday) after global demand projections were lowered by the International Energy Agency," said MF Global analyst Ed Meir.

The IEA forecast on Thursday a 28-year record annual drop in global oil demand, saying optimism for economic recovery was not yet reviving appetite for the crucial commodity.

The agency further trimmed its forecast for 2009, which it estimated at 83.2 million barrels per day (bpd), three percent lower than last year, "and the sharpest single year's fall since 1981," in its monthly oil market report.

Last month it had estimated 2009 demand at 83.4 million bpd.

"Forecast global oil demand for 2009 has been revised down slightly (since last month) following weaker-than-expected preliminary data in various regions" such as the United States, China and Russia, the IEA said.

"Preliminary data for early 2009 suggest little upside for now in our demand assessment," it added.

The IEA is the oil monitoring and policy arm of the Paris-based Organisation for Economic Cooperation and Development.

New York crude had struck a six-month high of 60.08 dollars a barrel on Tuesday, boosted by rising equity markets and a plunge in the greenback that made dollar-priced crude cheaper for foreign buyers.

Prices had bounced higher in intra-day trade on Wednesday after the US government's Department of Energy (DoE) published its weekly oil inventories report.

After nine consecutive weeks of increases, crude oil reserves declined by 4.7 million barrels last week, surprising most analysts who had expected another gain.

But oil prices finished lower on Wednesday after a sharp plunge on Wall Street amid retail sales data which signalled no relief for the recession-mired US economy.

The US stock market took a beating after US retail sales, a key economic driver for the US economy, fell 0.4 percent in April.

In Asia on Thursday, Hong Kong stocks dived 3.03 per cent and Tokyo tumbled 2.64 percent as weak the data dampened investor confidence in a quick rebound in the global economy.

Crude futures have slumped since striking record highs above 147 dollars a barrel on July 11, 2008. The spreading worldwide economic downturn has since drained energy demand.