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Continued downward pressure on crude oil price - BTMU

FXStreet (Łódź) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ remarks that on Tuesday the International Energy Agency published a bearish forecast report on global oil demand which further weighed on the price of crude oil.

Key Quotes

"The IEA reported that they had revised lower their forecasts for global oil demand in both 2014 and 2015."

"Global oil demand for 2014 was revised lower by 200k barrels/day and is now seen increasing by 700k barrels/day. Global oil demand for 2015 was revised lower by 300k barrels/day and is now seen increasing by 1.1 million barrels/day."

"In contrast, the IEA noted that OPEC crude oil output surged to a thirteen month high in September lead by Libya’s continued recovery and higher Iraqi flows. Higher output from OPEC as well as from non-OPEC producers lifted global supply by almost 910k barrels/day in September to 93.8 million barrels/day. With supply running ahead of demand it is placing downward pressure on prices which is expected to continue in the year ahead."

"The IEA noted that a further oil price decline would 'likely be needed for supply to a take a hit – or for demand growth to get a lift'."

"The currencies of other crude oil producing countries such as the Norwegian krone and Russian rouble are also amongst the worst performing global currencies so far during October. If the lower price of crude oil is sustained or if it declines further still reflecting more favourable demand and supply conditions it clearly poses downside risks for currencies from net oil producers."

"Lower commodity prices reinforcing downside risks to inflation The sharp decline in the price of crude oil is serving to increase downside risks to inflation in the near-term. It will exacerbate concerns over low inflation particularly where it is already well below Central Bank targets, which is most acute in Europe and in Japan keeping pressure on domestic central banks to ease monetary policy further."

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