Oil prices drop under 70 dollars amid ‘sluggish’ demand

Oil prices fell for an eighth session on Friday, ducking below 70 dollars amid “sluggish” energy demand in the United States.

Oil prices fell for an eighth session on Friday, ducking below 70 dollars amid “sluggish” energy demand in the United States.

New York’s main contract, light sweet crude for delivery in January, dropped 75 cents to 69.79 dollars a barrel.

Brent North Sea crude for January shed 41 cents to 71.45 dollars a barrel in London afternoon trading.

Crude futures had risen earlier in the day as official data showed that Chinese industrial output expanded by 19.2 percent in November from a year ago, up from 16.1 percent in October.

World oil demand is set to firm slightly more than expected next year because economies, especially in emerging countries, are recovering but US consumption is “sluggish,” the International Energy Agency said on Friday.

The global crisis has probably removed some demand permanently and energy-saving measures will also bear on consumption in years ahead, the IEA said.

But it raised its estimated price in real inflation-adjusted terms in 2014 to about 76 dollars a barrel from 60 dollars estimated in June.

“The oil market remains troubled by subdued US oil demand,” analysts from the Commonwealth Bank of Australia said in a report published on Friday that referred to new data from the US Department of Energy.

The DoE’s weekly report published on Wednesday said US distillate inventories had risen by 1.6 million barrels in the week ended December 4, against market expectations for a drop of 500,000 barrels.

Distillate stockpiles, which include heating fuel, usually fall as the northern hemisphere winter season begins to set in.

The DoE said US crude reserves fell by 3.8 million barrels last week but were 4.4 percent higher than their year-ago level and above the upper limit of the average range for this time of year.

Over the past four weeks, the US consumed on average 18.5 million barrels of petroleum products a day, a decline of 3.0 percent from the same period a year ago.

Jason Schenker of Prestige Economics said that traders were feeling the stiff headwinds against recovery from the worst recession in decades.

“Market participants seem to be coming slowly to the realisation that a true recovery will take years,” he said.

Oil traders were also looking ahead to an upcoming meeting of the Organization of Petroleum Exporting Countries that will decide on producers’ crude output levels.

Saudi Arabia — de facto head of OPEC — has said that the oil producers cartel should not raise its output quota at a meeting later this month as the current oil price is “close to the target” at between 70 and 80 dollars.