World oil prices weakened on the back of poor economic data, ahead of the latest energy inventories report and an interest rate decision in top consumer the US.
The market remained subdued, despite a forecast from the International Energy Agency (IEA) that economic recovery, mainly in Asia, would push up global oil demand by 1.4% a year until 2015.
New York's main futures contract, light sweet crude for delivery in August, fell eight cents to $77.77 a barrel. The July contract had expired yesterday.
Brent North Sea crude for August delivery was down four cents at $78 in midday deals.
The US government's Department of Energy (DoE) will publish its report on American oil inventories for the week ending June 18 later today.
The weekly snapshot is a key market indicator of demand because the United States consumes far more oil than any other country.
And the US Federal Reserve's Federal Open Market Committee (FOMC) is expected to keep US interest rates at historic lows when it meets later Wednesday, as it tries to keep a languishing recovery on track.
‘Today, the main focus for the energy market will switch to the weekly oil inventories report and any further details from the FOMC announcement,’ said analyst Myrto Sokou at the Sucden brokerage in London.
‘US new home sales figures for May could also draw investors' attention, as the existing home sales data yesterday were quite disappointing and hurt sentiment.’
The New home sales data for May, slated for release later, is expected to show them plunging to 430,000 from 504,000 in April.
Oil had also fallen yesterday as poor US existing home sales numbers erased a brief surge of market optimism over China's recent move to make its currency more flexible.
Meanwhile, the Paris-based IEA - the oil policy arm of the Organisation for Economic Cooperation and Development - said in a report that oil demand will be spearheaded by emerging nations.
‘The IEA report said today that increasing global oil supplies will possibly offset higher oil demand over the next five years, but the agency raised the global oil demand growth outlook to an average 1.4 percent for every year to 2015, citing potentially robust demand from the emerging markets,’ added Sokou.
‘The IEA said that global oil supply will increase to reach 96.5 million bpd (barrels per day) by 2015, mainly led by non-OPEC countries, amid concerns over a weaker economic growth from the developed countries that could hurt global oil demand.’
However, if sovereign debt crises and other drags slow down the recovery, oil demand might grow by only 1% a year and the trough in usage would last for four years, the IEA added in a medium-term energy-markets outlook.
Yesterday, it emerged that a Louisiana judge had blocked a six-month moratorium on deepwater drilling in the Gulf of Mexico that had been ordered by President Barack Obama in response to the BP oil-spill disaster.
