Oil slips as IEA trims global Oil demand forecast

World oil prices on Friday fell below $60 a barrel after recent strong gains, as the International Energy Agency (IEA) trimmed its 2006 global demand forecast and reported a sharp rise in energy stocks in top consuming nations, dealers said.

Oil prices slipped nearly 3% after surging above $61 a barrel on Thursday. What had hurt the oil market was a monthly report from the IEA that depicted the agency’s decision to trim its outlook for 2006 global oil demand growth from 1.2 percent to 1.1 percent or 130,000 barrels per day (bpd) to 900,000 bpd.

World oil demand in 2006 was forecast to grow by 1.1 percent this year to an average of 84.5 million barrels per day (bpd), the agency said in the monthly oil market report published on Friday.

Demand growth for 2007 was forecast to expand by 1.7 percent at 85.9 million bpd, slightly lower than an earlier forecast of 86 million bpd.

The IEA also predicted a 2.6 percent rise in fourth-quarter global energy demand, citing high consumption in the United States, the world's top oil consumer. “Demand growth in the fourth quarter is expected to be exceptionally strong,” said Lawrence Eagles, head of the IEA’s Oil Industry and Markets division. “And that is not even allowing for a cold winter. If we see a cold winter it will be even stronger.”

The Paris based IEA, an adviser to 26 industrialized countries, also said global oil inventories rose in the third quarter by the biggest amount since 1991. The agency said stockpiles in OECD (Organisation for Economic Co-operation and Development) countries grew by 1.15 million barrels per day in the third quarter, the biggest third-quarter jump in 16 years.

Light sweet crude for delivery in December slipped US$ 1.57 to close at US$ 59.59 a barrel at the New York Mercantile Exchange, after jumping $1.33 a day earlier. In London, Brent North Sea crude for December delivery dropped US$ 1.61 to close at US$ 59.71 a barrel.

Heating oil futures fell 4.90 cents to settle at $1.6966 a gallon on the Nymex and unleaded gasoline futures dipped 3.83 cents to close at $1.5627 a gallon.

Over Wednesday and Thursday, prices had gained well over two dollars a barrel both in New York and in London, touching peaks above US$ 61, amidst fears of more output cuts from the OPEC cartel.