LONDON, 12 October 2005 — World oil prices climbed sharply yesterday after the International Energy Agency made a smaller-than-expected downward revision to energy demand growth, analysts said. New York’s main contract, light sweet crude for delivery in November, jumped $1.05 to $62.85 per barrel in early trading. In London, the price of Brent North Sea crude for November delivery rose 75 cents to $59.53 per barrel. “Today’s October IEA monthly oil market report must be counted as representing serious damage to the theme of oil ‘demand destruction’ that has recently helped to drive oil and refined product prices lower,” said Barclays Capital analyst Kevin Norrish.
The IEA reduced its forecast for growth of global oil demand this year by 90,000 barrels per day to 1.26 million barrels per day. Investec analyst Bruce Evers added: “The decline in demand as indicated by the IEA is not as big as some people feared. Some people thought that the revision downward would be much bigger than that.”
Oil prices have recently slumped from record high points above $70 in New York, as the high cost of crude reduced global demand for energy. “The IEA monthly report was, on balance, bullish for the market,” Calyon analyst Mike Wittner said.
The IEA said that while world oil markets were absorbing disruption from recent severe hurricane damage to oil installations, further official action may be needed to compensate for reduced supplies of energy.
Hurricane damage closed off 1.2 million barrels per day of oil production in the US Gulf region in September, the IEA said.