Updated from 10:53 a.m. EST
Crude-oil futures slipped below $60 Friday after the International Energy Agency shaved its forecast for global oil demand growth this year.
The International Energy Agency, an energy advisory group in Paris, trimmed its 2006 forecast for global demand growth by 80,000 barrels to 84.5 million barrels. Lower demand in China shaved the forecast to growth of 1.1%. Its forecast for next year remains the same at 1.7%. This marks the third month in a row the group has lowered its demand estimate.
Light, sweet crude tumbled $1.57 to $59.59 a barrel on Nymex. On Thursday, oil prices closed at a two-week high of $61.16 a barrel on slimming fuel supplies and an increasing likelihood that OPEC will uniformly trim output this month.
Wholesale unleaded gasoline shed 3 cents to $1.56 a gallon and heating oil dipped 4 cents to $1.69 a gallon. Natural gas finished down 16 cents at $7.79 per million British thermal units.
The rapid drop in oil prices shows how volatile the market has become and how traders seize on any scrap of information as an excuse to bid prices up or down. Over the past few weeks, the markets have alternatively focused on brimming fuel inventories and whether the Organization of the Petroleum Exporting Countries will trim production as expected.
OPEC last month agreed to decrease output by 1.2 million barrels per day in November, but data from the U.S. Energy Department shows otherwise. The federal agency said earlier this week it expects the cartel to decrease output by less than 800,000 barrels per day. Many countries are enjoying millions in oil revenues and don't want to lose them.
At the same time, fuel inventories are as high as 11% above last year thanks to mild temperatures and low heating demand. But that cushion could quickly dissolve if temperatures and demand soars.
Global demand for OPEC crude is predicted to climb by 1.6 million barrels per day this year as non-OPEC members produce less, according to the IEA's monthly report. The jump in demand, teamed with OPEC's production cut, is likely to help drive oil prices higher. If the cartel opts for another decrease at its next meeting in December, oil price could skyrocket.
Meanwhile, Iran, which had been the focus of energy traders, reiterated its pledge to continue nuclear development activities regardless of European and U.S. moves to slap trade sanctions on one of the world's top crude producers.
"By God's good grace our powerful nation will continue its path and the enemy cannot do a damn thing on the nuclear issue," said Iranian President Mahmoud Ahmadinejad Friday,
Members of the U.N. Security Council are still trying to win unified support for a trade embargo against Tehran. Russia wants the resolution watered down so it does not include travel bans, which the U.S. opposes.
Energy shares reversed and were down 0.8% on the Amex Oil Index, with
The world's largest publicly traded energy company,
, was recently down 0.6% at $74.18 after big gains earlier in the week.
Italian oil company
net income jumped 3.5% during the third quarter to $3.1 billion, or $1.67 per share. Sales came in at 20.37 billion euros, up 12% from last year. Eni chalked up the increase to high oil prices for Brent crude, the benchmark contract in Europe.
Eni share were recently rising 1.8% to $63.57.