Oil is on track to fall this week for the first weekly drop since mid October, as a forecast for economic growth in Germany was lowered and an earthquake in Japan created worry that consumption of crude might be lowered.
Bundesbank, the Central Bank of Germany, lowered its economic expansion forecast for next year by a full point after the common currency region has fallen once again into a recession due to the debt crisis. Concerns over the demand for fuel have taken an upper hand said analysts as January crude was at $86.12 per barrel and yesterday the barrel dropped $1.62 ending at $86.26. That was the lowest crude has been per barrel since the middle of last month. This week through Friday morning, prices of crude were off 3.1%, while they are down almost 13% for the year.
The Central Bank in Germany lowered its 2013 growth projection as well to 0.4% after it had been projected to be 1.6% in June. Bank officials said that Europe’s largest economy would also grow by only 0.7% for the current year down from its previous projection of 1% growth. The bank said there would be shrinkage in the economy over the last quarter of this year and for the first quarter of 2013, the economy would remain stagnant.
Most analysts believe that crude will continue to fall next week due to concerns over a weak growth in the economy reducing the demand for crude and increasing its inventories. Nearly half of the analysts polled in a recent survey believe the price will fall through mid December.
China’s oil demand is expected to increase by over 3.4% during 2013, as the second largest economy in the world continues on its path to economic recovery.