Oil price falls as experts see weaker demand

AP News
Posted: Oct 12, 2011 4:27 PM
Oil price falls as experts see weaker demand

Oil prices fell slightly Wednesday after a group of energy experts cut its forecast for global crude demand.

The International Energy Agency joined OPEC in trimming its demand forecasts for this year and 2012. The Paris-based IEA still expects world demand to hit a record this year, but more slowly than previously expected. The IEA's outlook followed a similar one from the Organization of Petroleum Exporting Countries on Tuesday.

Benchmark West Texas Intermediate (WTI) crude fell 24 cents to end the day at $85.57 per barrel in New York.

The drop ended five straight days of rising oil prices. Oil had rebounded from 12-month lows it reached last week on encouraging economic news. Fears of another recession faded as U.S. jobs and manufacturing data suggested the economy would continue to grow, albeit slowly. And European leaders took steps to strengthen the region's banking system in the wake of a festering debt crisis.

Meanwhile, U.S. motorists continued to cut back on driving. MasterCard SpendingPulse reported that drivers bought less gas for the 29th week in a row. Gas consumption last week was down about 2 percent from the same period last year, according to SpendingPulse.

At the pump, the national average for a gallon of regular rose nearly a penny to $3.405, a record for this time of year, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is about 59 cents higher than it was a year ago.

And while drivers are being pinched at the pump, the Energy Department's Energy Information Administration said Wednesday that home owners in the U.S. can expect to pay more to heat their homes this winter. The EIA said that prices for natural gas, propane and heating oil will all rise.

In other energy commodities trading on Wednesday, heating oil added 3.1 cents to finish at $2.9347 per gallon while gasoline futures were nearly unchanged to end at $2.7487 per gallon. Natural gas futures lost 12.7 cents to end at $3.489 per 1,000 cubic feet.

Brent crude, which is used to price oil from foreign countries, rose 63 cent to end the day $111.36 in London. The international benchmark increased as investors bought Brent and sold WTI as part of a larger trading strategy.