Crude oil prices came under pressure Tuesday from an International Energy Agency (IEA) report that lowered estimates for global oil demand for the remainder of 2012. U.S. crude traded 19 cents per barrel lower on the day at $85.38, while Brent crude closed 79 cents lower in London at $108.28 per barrel.
Supplies on the world oil market were plentiful even before Iran increased production during October despite economic sanctions from the West. The IEA expects demand to fall by nearly 300,000 barrels a day the final three months of 2012.
“What we can see now is that the market is well supplied,” IEA Executive Director Maria van der Hoeven told the annual “Oil & money” conference in London. At the same event, OPEC Secretary General Abdullah al-Badri said, “There is no shortage anywhere in the world.”
Falling oil prices have resulted in lower retail gasoline and diesel prices in the U.S. This week’s average U.S. diesel price reported by the Energy Information Administration fell below $4 for the first time in months to $3.98 per gallon. That’s 3 cents lower than the previous week and about even with last year at this time.
Average U.S. gasoline prices fell 4 cents last week to an average of $3.44 per gallon. That price is about a penny lower than the same week last year.
Since reaching a high of $99 per barrel in September, U.S. crude oil prices have fallen on a series of reports that continue to show increasing global supplies. Europe’s economic woes and the impending “fiscal cliff” in the U.S. makes many oil traders cautious.