Oil prices fall as market uncertainty prevails over demand

Oil prices are falling today, as uncertainty prevails in the market over the future outlook for demand. North Sea Brent crude was down approximately 1.1 percent at around 19:00 CEST, falling below 83 dollars per barrel. US light crude West Texas Intermediate (WTI) was also down by roughly 1.1 percent at the same time, trading above 78 dollars per barrel.

Analyst Jim Ritterbusch of Ritterbusch and Associates told Reuters that oil prices are being pushed lower by data showing an increase in US stocks of petroleum products. The stronger dollar also contributed to lower oil prices today. It makes oil and other commodities more expensive for holders of other currencies, which usually reduces demand.

The dollar has recently benefited from expectations that the US Federal Reserve (Fed) will not rush to cut interest rates. The outlook for future interest rates could be influenced by US inflation data for April, which the US Department of Labor will publish next week.

The Fed is currently holding its benchmark interest rate in a range of 5.25 to 5.50 percent, its highest level since 2001. High borrowing costs usually undermine economic growth and, in turn, demand for fuels. The United States is the world's largest economy and its biggest oil consumer.

Citigroup forecast that the average price of Brent crude would fall to 74 dollars per barrel in the third quarter from 86 dollars per barrel in the second quarter. It pointed to signs of slowing growth in global oil demand.

Oil prices in dollars per barrel (about 159 litres):