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Oil falls on IEA cut in demand forecast

OIL fell to around US$51 a barrel yesterday after the International Energy Agency cut its forecast for oil demand.

The IEA said on Friday that world oil demand will fall by 2.4 million barrels per day this year and said developed countries' oil inventories in February rose to their highest since 1993.

"The IEA has revised demand down by 1 million bpd and stocks are still very high," said Olivier Jakob, analyst at Petromatrix. "Overall, we need to see some stockdraws."

United States crude fell US$1.24 to US$51.00 yesterday morning, the first day of trade since Thursday's nearly 6-percent gain on the back of a rally on Wall Street. Brent crude fell US$1.11 to US$52.95.

Dealers will be looking this week for confirmation of the demand outlook.

The US Energy Information Administration will release its short-term energy outlook today and OPEC will publish its monthly view tomorrow.

Oil has recovered to a US$47-US$54 range for the past four weeks from a low of US$32.40 in December.

But it is still down close to US$100 from a record high of above US$147 last summer.

News that Saudi Arabia would trim oil supplies to some of its Asian customers and one European buyer also limited the downside, suggesting that the world's top exporter remains concerned about high inventories.

The IEA said inventories in developed countries rose to 61.6 days of forward demand cover in February, the highest since 1993 and well above the roughly 52 days cover that many in OPEC consider comfortable.

OPEC has agreed to cut oil output since September by a total of 4.2 million bpd, or 5 percent of world supply.


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