Record-high U.S. crude stocks, a struggling European economy, worries about China’s growth outlook, and the strong dollar have weakened oil prices to around mid-$90s a barrel. Partly offsetting this unfavorable view has been the improvement in domestic labor market conditions that points towards an improving economic growth backdrop.
The immediate outlook for oil, however, remains tepid given the commodity’s fairly positive supply picture. In particular, while Saudi Arabia is likely to cut back on its production, global oil output is expected to get a boost from sustained strength in North America, Iraq, Angola, Brazil and Colombia. On the other hand, the growth in global liquids fuel demand will be relatively soft in the absence of a strong global recovery.
According to the Energy Information Administration (EIA), which provides official energy statistics from the U.S. Government, world crude consumption grew by an estimated 0.7 million barrel per day in 2012 to a record-high level of 89.0 million barrels per day.
— Zacks Investment Research