Crude oil futures pare losses after IEA report

Forex Pros – Crude oil futures pared losses on Thursday, after the International Energy Agency raised its long-term global oil demand forecast, but prices remained pressured by a stronger U.S. dollar. 

On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at USD95.11 a barrel during U.S. morning trade, dipping 0.14%.    

It earlier fell as much as 0.95% to trade at USD94.32 a barrel, just above Wednesday’s four-month low of USD94.00 a barrel.

In its monthly report released earlier in the day, the IEA raised its five-year forecast for global oil demand growth to 94.2 million barrels per day, up from current levels of 89.2 million barrels per day, with China accounting for nearly 41% of the gain.

The group raised its assessment of how much OPEC oil would be needed this year by 400,000 barrels per day to 30.1 million, adding pressure on the oil cartel to boost production.

The IEA said that it did not expect Libyan oil output to return to pre-war levels until 2014.

David Fyfe, head of the IEA's oil industry and markets division said there was a “clear need” for additional OPEC supplies, while adding that if OPEC doesn't pump extra oil, “the market will tighten substantially resulting in overheating prices and economic damage”.

Meanwhile, mounting fears over a potential Greek default continued to boost demand for the safe haven U.S. dollar.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.18% to trade at 76.16, after earlier rising to 76.42, the highest since May 25.

Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery added 0.45% to trade at USD114.19 a barrel, up USD19.08 on its U.S. counterpart.

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