Weak demand for crude oil and pessimism about the global economic outlook caused the International Energy Agency (IEA) to reduce its forecasts for global oil demand in 2013 for a third consecutive month.
The IEA released its April Oil Market Report (OMR) on Thursday. The report highlighted the significant supply risks that continue to threaten the market. It cut expectations for oil demand growth to 795,000 barrels a day from the previous forecast of 820,000 barrels a day that was made last month.
Oil closed down $1.19 to $93.47 per barrel Thursday, logging its first loss of the week.
The IEA forecast comes one day after the Organization of the Petroleum Exporting Countries (OPEC) cut its global oil demand estimate for a second time in two months. It now expects demand will be 800,000 barrels a day in 2013, down 40,000 barrels a day from its previous prediction.
The OMR points to signs that Europe's demand is the weakest it has been since the 1980s.
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"Europe remains by far the worst affected of all the large oil consumption regions, as the ... bleak macroeconomic backdrop continues to take its toll," the Paris-based group said in the report.
Matthew Parry, IEA senior oil market analyst and author of the report, said that he essentially left the latest demand forecast unchanged. "We still have a relatively bearish supply-demand balance for the rest of the year," Parry told MarketWatch. "However, ongoing geopolitical concerns will likely continue to remain a theme of the market in 2013."
Meanwhile, Natural gas futures marked their highest close in 20 months amid a decline in late heating-season stockpiles in the U.S.