Oil fell $2 a barrel to plumb new five-year lows on Friday after the world’s energy watchdog forecast even lower prices on weaker demand and higher supplies next year.
Benchmark Brent crude oil tumbled to below $62 a barrel and US crude slumped to under $58 to extend Thursday’s landmark fall below $60.
Surging crude inventories in the United States and top oil exporter Saudi Arabia’s reiteration that it will not cut production had roiled prices over the past two days despite data pointing to strong US economic recovery.
On Friday, the Paris-based International Energy Agency (IEA) which coordinates the energy policies of industrialised countries, cut its outlook for demand growth in 2015, triggering another collapse.
The IEA slashed its outlook for global oil demand growth for 2015 by 230,000 barrels per day to 900,000 bpd on expectations of lower fuel consumption in Russia and other oil-exporting countries.
It predicted that oil-producing nations outside of the Organization of the Petroleum Exporting Countries will add to global supplies. It also expected prices to fall further.
Brent was down $1.86 at $61.82 per barrel by 12:18 p.m. EST (1718 GMT), after falling to $61.35, its lowest since July 2009. US crude was down $2 at $57.95 per barrel, after touching a bottom at $57.34, its weakest since May 2009. Brent was headed for a near 11 per cent loss on the week and US crude about 13 per cent. In dollar terms, both markets were down more than $8 a barrel on the week.
The relentless slide pressured energy stocks and currencies exposed to crude exports while dousing appetite for riskier assets and encouraging investors to seek safety in core government bonds.