Downward pressure on oil continues : IEA

The International Energy Agency (IEA) has said that the price of Brent crude dropped below 63 dollars a barrel, its lowest price since July 2009.

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The IEA added to downward price pressures on Friday by cutting its forecast for global demand for crude oil in 2015.

For now, analysts say, there seems to be no safety net for oil prices.

“In the very short term prices can go lower; the market is weighted to very bearish sentiment,” Richard Mallinson, an analyst at Energy Aspects, a London-based research firm, said Friday.

The Toronto Stock Market fell sharply Friday on the slide in oil prices, with the S&P/TSX composite index dropping 173.22 points to 13,731.9. In the U.S., the Dow Jones industrials plunged 315.51 points to 17,280.83, the Nasdaq gave back 54.56 points to 4,653.6 and the S&P 500 index was down 33 points at 2,002.33. European stocks also fell, posting their biggest weekly loss since mid-2011.

“This is a bloodbath,” said Pierre Martin, a trader at Saxo Bank. “After such a negative week, there’s not even a rebound into the close. The fact that oil can’t find a floor is spooking market players.”

Analysts say a major cut in production would be needed next year to avoid an inventory buildup and to stabilize falling prices. But hopes of a supply cut were dashed late last month when OPEC declined to change its output ceilings at a meeting in Vienna.

The energy agency said in its December oil market report that demand was likely to be 230,000 barrels per day less than previously forecast. The main reasons for the lowered forecast were less oil consumption in countries that produce it like Russia and a weaker-than-expected global economy.

Agencies/Canadajournal