Brent Steady After Tuesday's Sharp Fall
Brent crude oil was steady at $85.25 at 7:30 GMT on Wednesday morning after posting its largest daily loss in two years on Tuesday.
The commodity was weighed down by the International Energy Agency’s decision to cut its global growth forecast as well as speculation that OPEC wasn’t planning to cut output in order to boost prices.
The Wall Street Journal reported that Saudi Arabian Prince Al-Waleed Bin Talal wrote an open letter to oil minister Ali Al-Nami, saying that prices must remain between $80 and $90 to keep the kingdom’s budget balanced.
Earlier, Saudi officials had said they would be willing to allow oil prices to fall lower for an extended period in order to regain market share.
Iran has also said it would accept lower oil prices and that its budget would be unaffected, but other nations like Venezuela have called for a cut as they require prices to be above $100 to meet their budget requirements.
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The conflict of opinion within OPEC has depressed Brent prices as many are worried that disagreements between members could prevent the cartel from taking action.
Meanwhile, the International Energy Agency trimmed its demand growth forecasts for both 2014 and 2015 on Tuesday to reflect the effects of the faltering global economy. This marks the third time the IEA has reduced its forecast for demand growth.
The agency lowered its demand growth projections by 200,000 barrels per day in 2014 and 300,000 bpd in 2015.
Most analysts see crude prices continuing to fall as the global supply glut widens. The commodity will likely continue to slide until prices are low enough to prompt a pick up in demand.
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