IEA demand downgrade fails to curb crude prices

Oil prices rose yesterday on the weaker dollar and mostly positive global data as traders ignored news that the International Energy Agency (IEA) had cut its estimate for demand growth in 2012, traders said. New York's main contract, West Texas Intermediate crude for delivery in February, increased 60 cents to $101.31 a barrel. Brent North Sea crude for March gained 29 cents to $111.82. "A very quiet start to the day, with oil up on a slightly weaker dollar," VTB Capital commodities analyst Andrey Kryuchenkov said. "Crude mostly ignored the IEA's downbeat assessment of demand growth in 2012." The dollar lost ground against the euro yesterday as speculation that China could ease monetary policy improved market sentiment and encouraged investors to buy the risk-sensitive single currency. The shared Eurozone unit rallied to $1.2811 in London late morning trade from $1.2737 in New York late Tuesday. The IEA yesterday cut its 2012 global oil demand growth forecast, with the market dragged down by a weakening world economy and stubbornly high prices, while the nuclear crisis with Iran deepens. Stable outlook The IEA added that oil prices, however, remained stable as "a rising likelihood of sharp economic slowdown" was offset by supply concerns linked partly to the Iran crisis. In December, supply from non-members of the Organisation of Petroleum Exporting Countries (Opec) fell by 140,000 bpd to 53.2 million barrels per day (bpd) due to Middle East unrest and other unplanned outages, the IEA said. A rebound to 340,000 bpd growth is expected for the first quarter of 2012 and 1.0 million bpd for 2012 overall. The IEA warned that in 2012 that geopolitical risks have shifted to Nigeria, Iraq and "most pressingly, Iran."