Oil prices fell as a widely watched market forecaster lowered its estimate for the growth in crude demand next year. The decline left prices up only 1.6% on the week despite surging to a three-month high Tuesday.
The International Energy Agency lowered--by 20%--its forecast for 2013 global demand growth. The energy watchdog cited worries about the world's economy in cutting its expectations to 0.8 million barrels a day from its earlier estimate of 1 million barrels a day.
"They gave a pretty downbeat outlook," John Kilduff, a founding partner of Again Capital, said of the report. "It was fairly negative."
The IEA echoed an Organization of Petroleum Exporting Countries report Thursday. The group warned that it could lower its own demand-growth forecast for 2013 by up to 20%. OPEC blamed an economic slowdown in Asia, particularly in China, the world's No. 2 oil consumer.
Light, sweet crude for September delivery fell 49 cents to settle at $92.87 a barrel on the New York Mercantile Exchange. Brent crude lost 27 cents, or 0.2% to settle at $112.95.
Prices also were dented by signs that China's economic engine was losing steam. The nation's July trade surplus fell to $25.1 billion, well below the forecasted $35.2 billion.
In addition, China reported its lowest level of crude-oil imports in nine months.
Pessimistic Chinese data recently have supported oil prices, as traders hoped signs of a slowdown would prompt the Chinese government to implement new stimulus measures to boost economic growth.
However, "the steady stream of negative news out of not only China, but the U.S. and Europe as well, has become so great that it is finally trumping stimulus-led expectations for growth," brokerage Tradition Energy said in a note.
The sagging predictions of demand closed out a week where U.S. crude futures rose to a 12-week high of $93.67 a barrel Tuesday on several factors.
Fears about the demise of the euro zone were significantly calmed by European Central Bank President Mario Draghi's promise to do "whatever it takes" to save the single currency two weeks ago, market participants said.
At the same time, rising tensions in Syria put upward pressure on crude. Syria produces a miniscule amount of oil, but Iran is a major backer of Syrian President Bashar al-Assad. Traders and analysts fear that if things unravel in Syria, Iran may move to disrupt oil supplies from the region.
News out of Syria and Iran has been "helping to boost" prices, Mr. Kilduff said.
Hopes that the Fed would institute another round of monetary stimulus also helped buoy the market in recent weeks. Crude futures receive a double benefit from such actions. First, any additional economic activity stirred will likely spur demand for more oil. Also, stimulus normally weakens the dollar, raising the price of dollar-denominated crude futures.
But the slack demand outlook slammed the lid on the rising momentum in prices Friday, according to Tariq Zahir, a managing member of Tyche Capital Advisors.
"Prices are relatively capped to the upside," Mr. Zahir added.
Front-month September reformulated gasoline blendstock, or RBOB, rose 3.1 cents, or 0.1%, to settle at $3.0039 a gallon. September heating oil fell 2.45 cents, or 0.8%, to $3.0205 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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