London, United Kingdom (AHN) – High crude oil prices could harm the global economic recovery while also killing demand for oil, the International Energy Agency (IEA) said in its report Thursday.

The higher prices and weaker economic outlook caused the IEA to issue a downward revision of its forecast for world oil demand.

IEA officials now predict global oil demand will average 89.2 million barrels per day this year. Although that figure is still an increase from the demand of 87.9 million gallons daily last year, it is lower than previous forecasts for 2011 demand.

“After gaining $7-8/bbl in April, prices for benchmark Brent and WTI plummeted more than $16/bbl over the course of the week ended 6 May, to $109.13 and $97.18/bbl, respectively, during a broad commodity rout. Prices have since partially recovered their losses, with Brent trading at $115/bbl and WTI at $101/bbl at press time,” the IEA said Thursday.

Uncertainty over demand has led to volatility in prices in the commodity markets in recent weeks.

That trend continued when the IEA report caused a drop in oil prices on Thursday before traders gained confidences and boosted prices later in the day for both Brent crude and U.S. light sweet crude.

View full post on All Stories