Oil fell the most in nearly a week as investors assessed the International Energy Agency’s reduced forecasts for global oil demand in part due to a slowdown in air travel. U.S. crude futures lost steam and declined 1% on Thursday after closing at a five-month high on Wednesday. The IEA reduced its demand estimates for almost every quarter through to the end of next year. Air travel remained two-thirds lower than last year in July, normally a peak month because of holiday flying, it said in a monthly report.
The downward revisions in the IEA report signaled that “oil prices have been getting a bit ahead of the economic recovery,” said Michael Lynch, president of Strategic Energy & Economic Research. “It reflects a shift of sentiment from recovery toward stalling economic growth.”
Still, the IEA said world markets should tighten during the rest of the year with OPEC nations keeping production limited.