Crude prices was seen in the red territory on Wednesday, trading near $82 a barrel as traders continue to raise concerns over the muted oil demand outlook by the International Energy Agency.
Futures for the North American West Texas Intermediate (WTI) crude for November delivery fell 1.8% to $80.37 a barrel on the New York Mercantile Exchange at the time of writing, the lowest since June 2012. On Tuesday, WTI crude traded 4.74% lower to $81.68 a barrel.
The European benchmark Brent crude slid 0.36% lower to $85.71 a barrel on the ICE Futures Europe exchange based in London.
“While the near term outlook for many risk assets appears rather dire, evidence says that the worst is behind us for Brent crude oil as well as WTI,” Bank of America Merrill Lynch analysts wrote in a note.
“Looking at weekly continuation charts, into $82.30/$75.71 we look for a medium term base and bullish turn in trend with upside targets seen towards the Feb’12 highs at $128.40 before greater signs of topping emerge,” Bank of America Merrill Lynch added.
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On Tuesday, the Paris-based International Energy Agency (IEA) lowered its forecast for the global oil demand for this year for the fourth month in a row. The IEA projects a rise of 700,000 barrels a day to 92.4 million barrels, 200,000 barrels a day less than the previous estimates.
The Organization of the Petroleum Exporting countries (OPEC), which supplies approximately 40% of the world’s crude are responding to the falling trend by cutting prices, spurring speculation that the group will compete for market share rather than cut the oil supply. Currently the oil-rich producing countries are more interested in their market shares than stabilizing prices.
The crude falling trend prompted Venezuela and Russia to call for an emergency OPEC meeting, as they mute oil prices. The OPEC group is scheduled to meet in Vienna on November 27.
Oil traders are expecting two separate reports about the US oil inventories, one from the energy Information Administration due on Thursday and another from the American Petroleum Institute on Wednesday.
The reports are expected to show a rise in supply by 2.5 million barrels last week, while gasoline supplies are forecasted to ease by 1.55 million barrels and distillate supplies probably fell by 1.65 million barrels in the week ended October 10.
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