Oil sinks below US$63 to lowest in more than 5 years

[LONDON] Brent crude oil slipped on Friday to below US$63 a barrel, its lowest since July 2009, dragged down by persistent concerns over a global supply glut and a sluggish demand outlook.

Brent is down roughly 9 per cent this week, some 45 per cent below its June peak above US$115 per barrel.

Oil prices will likely come under further downward pressure, the International Energy Agency said as it cut its outlook for demand growth in 2015 and predicted that healthy non-OPEC supply gains were poised to aggravate the glut.

The agency, which coordinates the energy policies of industrialised countries, cut its outlook for global oil demand growth for 2015 by 230,000 barrels per day (bpd) to 0.9 million bpd on expectations for lower fuel consumption in Russia and other oil-exporting countries.

The Organization of the Petroleum Exporting Countries (Opec), which accounts for a third of global oil output, cut its 2015 demand forecast this week to the lowest in more than a decade. "It's following the trend lower. The market has reacted strongly to the Opec forecast cut, and it is focusing only on the negative," said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam.

He added that there was little technical support until the US$50-55 level.

Brent crude was down 85 cents at US$62.83 per barrel by 0922 GMT.

US crude was down $1.04 at US$58.90 a barrel, after falling to a low of US$58.80, also the weakest since July 2009. The contract has lost about 10 per cent this week.

Remarks by Saudi Arabia's oil minister reiterating that the kingdom will not cut output, and a surprise jump in US crude and distillate inventories, have driven down oil prices this week.

REUTERS