Oil falls below $52 on IEA demand forecast

[April 13, 2009]  SINGAPORE (AP) -- Oil prices fell to below $52 a barrel Monday in Asia after the International Energy Agency said it expects global crude demand to drop this year amid the worst worldwide recession in decades.

Benchmark crude for May delivery fell 77 cents to $51.47 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange.

The contract on Thursday rose $2.86 to settle at $52.24 a barrel. Trading was closed on Friday for the Good Friday holiday.

The Paris-based IEA, an energy policy adviser comprised of 28 countries, said on Friday that demand this year will likely fall by 2.4 million barrels a day to 83.4 million barrels, or 2.8 percent lower than last year.

The IEA cited "a growing consensus that economic and oil demand recovery will be deferred to 2010."

"That's very serious demand destruction," said Victor Shum, an analyst with consultancy Pervin & Gertz in Singapore. "The macroeconomics don't look good at all for this year."

Oil prices have rallied from below $35 a barrel in February, mirroring a jump in stock markets, as investors anticipate massive global stimulus packages may spark a recovery in the second half.

"Investors have brushed aside near-term worries about the economy and oil demand," Shum said. "They're looking ahead to an eventual revival in the global economy."

Traders will be watching a slew of quarterly corporate results this week for signs the worst of the economic downturn is over. Banks such as Goldman Sachs Group Inc., Citigroup Inc. and JPMorgan Chase & Co. will report this week along with Intel Corp., Johnson & Johnson, Mattel Inc.

On Sunday, Iran's oil minister Gholam Hossein Nozari told state television that a price of between $75 and $80 dollars a barrel is desirable for both Tehran and oil consumers.

Iran is a member of the Organization of Petroleum Exporting Countries, which as announced production cuts of 4.2 million barrels a day since September.

"OPEC compliance with the cuts remains quite high, but nobody, even in OPEC, expects prices to get to $75 this year," Shum said. "In the longer-term, it will likely get there, but not this year."

In other Nymex trading, gasoline for May delivery fell 1.10 cents to $1.47 a gallon and heating oil dropped 1.35 cents to $1.42 a gallon. Natural gas for May delivery sank 4.1 cents to $3.57 per 1,000 cubic feet.

In London, Brent prices fell 38 cents to $53.68 a barrel on the ICE Futures exchange.

[Associated Press; By ALEX KENNEDY]

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