Nymex crude edged lower Tuesday as concerns grew over central banks cutting back stimulus measures and a lower forecast for global oil demand by the Organization of the Petroleum Exporting Countries.
Light, sweet crude for July delivery settled down 39 cents, or 0.4%, at $95.38 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange for July delivery settled 99 cents lower at $102.96 a barrel.
Crude futures took a cue from such other risky assets as equities, with futures down as much as $1.29 Tuesday morning in New York, as the Bank of Japan held off on introducing additional stimulus efforts. Oil futures pared some of their losses as equities partially recovered midsession. The Standard & Poor's 500 Index recently fell 0.6% to 1,633.42.
Analysts said the Bank of Japan's decision stoked anxiety in the oil market over whether central banks elsewhere will continue their monetary-easing policies. Such policies have been helping many developed economies chug along in recent years. Japan is the third-largest oil consumer after the U.S. and China.
"People are concerned with worldwide demand," said Tariq Zahir, managing member of Tyche Capital Advisors.
Concerns about sluggish oil demand, particularly in developed economies like the U.S. and Europe, have weighed on oil prices. Those concerns were underscored last week when May's U.S. nonfarm payrolls report showed a slight uptick in unemployment in the world's biggest oil consumer.
OPEC further stoked demand concerns Tuesday after releasing a report trimming its global oil-demand growth forecast for 2013 by 10,000 barrels a day. Demand for the commodity will still grow by about 780,000 barrels a day this year, it said.
The oil-producer group warned that "risks are skewed towards the downside" for demand. "This is due largely to the weak economic outlook for Europe, as well as to any possible setbacks in the U.S. economic recovery," it said.
The OPEC forecast for world economic growth was unchanged at 3.2% for 2013, but it forecast a contraction of 0.6% in the euro zone and lowered China's growth forecast to 7.9% from 8%. The group also said its members increased production by 109,000 barrels a day in May.
Analysts said traders' concerns remained centered around the abundance of U.S. crude oil stockpiles. "There is just too much physical supply of oil," said Tim Evans, analyst at Citi Futures Perspective. "Crude oil does not have any real reason to turn around and rally."
The U.S. Energy Information Administration, in its short-term energy outlook Tuesday, also said rising production in North America would threaten to outstrip the expected growth in oil demand.
The market is also watching for the International Energy Agency's oil market report and the Energy Information Administration's weekly inventory report due Wednesday. Last week, the EIA said U.S. oil stockpiles fell by 6.3 million barrels for the week ended May 31, higher than analysts' expectations.
Front-month July reformulated gasoline blendstock, or RBOB, settled 2.50 cents lower at $2.8231 a gallon. July ULSD heating oil settled 2.63 cents lower at $2.8575 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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