Oil prices rally, then dip again

Oil prices rally, then dip again

Monday, October 20, 2014 1:15 pm

Oil prices fell on Monday after a brief rebound, with the market weighed down by weak demand growth in an oversupplied market.

US benchmark West Texas Intermediate for delivery in November slipped five cents to $82.70 a barrel.

Brent North Sea crude for December lost 48 cents to stand at $85.68 a barrel in London midday deals.

Both contracts had risen at the end of last week as investors snapped up bargains after prices had tanked to multi-year low points.

Oil prices have been hit hard in recent weeks by weak energy demand as the global economy stutters, a supply glut and price-cutting by major producers such as Saudi Arabia.

“Long-held assumptions about the determination of key OPEC producers to support prices appear to be dissolving as Saudi Arabia signals to the market that it may be comfortable with a long period of low oil prices,” British bank Barclays said in a research note.

While wishing to keep market share, Saudi has previously expressed concern that high prices can hinder economic recovery, hurting producers like itself in the long run.

Last week, the International Energy Agency cut its forecasts for demand growth for the third month in a row.

For this year, it expects demand to rise 700,000 barrels per day to 92.4 million, which is 200,000 fewer than previously forecast.

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