Despite a slight rebound in crude oil prices they remain close to their lowest in nearly six months. A number of factors have prompted this week’s major falls. The International Energy Agency has just cut its forecast for world consumption this year and next. The IEA thinks demand this year will be 100,000 barrels a day less than it estimated last month. Brent is down close to $63 a barrel. Oil prices have dropped by around 18% since touching a record $78.40 in mid-July. That is the steepest reversal in 16 years. Also this week, European Union foreign policy chief, Javier Solana, described as “productive’‘ his meeting with Iran’s top negotiator in the dispute over the country’s nuclear research. That has eased traders concerns that Iran’s President Ahmadinejad could halt oil exports if faced with UN sanctions.
The effect is starting to felt by consumers. Wholesale petrol prices at Rotterdam – which are an indicator for Europe in general – fell 27.5% from early August to the end of last week. In addition, the hurricane season in the Caribbean has been mild – so far – easing fears that a storm on the scale of last year’s Katrina or Rita could smash through the US oil rigs and refineries on the Gulf of Mexico. However in Nigeria oil workers started a three-day strike on Wednesday though companies say it has had little affect on production.