Oil prices fell $5 this week, fears of weak oil demand grow

Both Brent and WTI oil prices fell more than $5 this week as a string of economic indicators showed that global recovery is slowing around the world, raising fears of weak crude oil demand.

ICE Brent Oil Price

Brent crude oil futures closed trading on Friday at $75.11 on the ICE Futures Exchange, down $5.59 from the week’s early trading price of $80.70, 07.15 GMT on Monday 9th August.

NYMEX WTI Light Oil Price

US Light crude oil futures closed trading on Friday at $75.39 on the NYMEX, down $5.86 from the week’s early trading price of $81.25, 07.30 GMT on Monday 9th August.

“The whole tone of the week is that without the aid of an economic recovery, the market can’t hold $80. We traded right down to our next technical level at $75, and while the market wasn’t able to trade down from there, it is poised at that precipice.” said Gene McGillian, a broker with Tradition Energy.

There is currently alot of pressure from speculators when part of the global economy appears to be taking off, pointing to an increase in demand for oil, and then it will drop back on the release of something like US unemployment figures. This is making it very difficult to predict whether a drop will last ten minutes or ten weeks.

OPEC Oil Report Predicts Higher Oil Demand

OPEC inceased its outlook for 2010 and 2011 by 140,000 barrels a day each in its monthly report which came out on Friday 13th August. OPEC predicts that worldwide crude oil use will increase by 1.05 million barrels a day, or 1.2 percent in 2011 to average 86.56 million a day, OPEC’s secretariat said.

“Global economic recovery is projected to continue through the whole of 2011 with an even distribution between the first and second half of the year. Oil demand growth will remain moderate.” OPEC said in the report.

What’s In Store For Oil Prices Next Week

The oil market is likely to trade in a tight range this week in the absence of any major trigger and seems to have support at the $75 price level. On the downside, it’s worth noting that oil prices have dipped below the $70 a barrel mark only twice in 2010, in early February and May, for one trading day.

Once again, oil prices will take direction from US and European stock markets, the US dollar and major market and economic reports.