The price of oil slid below $95 a barrel on Tuesday as the International Energy Agency raised its U.S. oil production forecasts and cut its prediction for global crude demand.
By early afternoon in Europe, benchmark oil for June delivery was down 44 cents to $94.73 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 87 cents to finish at $95.17 a barrel on the Nymex on Monday.
The falls came after the Paris-based IEA, which advises 28 countries about energy issues, said rising U.S oil output would be the key source of new supplies over the coming five-year period.
"Following several years of stronger-than-expected North American supply growth, the shockwaves of rising United States shale gas and light tight oil (LTO) and Canadian oil sands production are reaching virtually all recesses of the global oil market," the IEA said in its in its medium-term market report. "The supply shock created by a surge in North American oil production will be as transformative to the market over the next five years as was the rise of Chinese demand over the last 15."
While noting risks such as the effects of the "Arab Spring" on investment and capacity growth in the North African and Middle East oil industries, the IEA said it expected "a more comfortable global oil supply/demand balance" in the next five years.
"North America has set off a supply shock that is sending ripples throughout the world," said IEA Executive Director Maria van der Hoeven. "The good news is that this is helping to ease a market that was relatively tight for several years. The technology that unlocked the bonanza in places like North Dakota can and will be applied elsewhere, potentially leading to a broad reassessment of reserves."
Also weighing on prices was the IEA's decision to trim its global demand forecast for every year between 2013 and 2017, going from 20,000 barrels a day less this year to 95,000 barrels a day less in 2017 compared to its expectations in the previous report, released in Oct. 2012.
Overall, the IEA forecast global oil demand growth to rise by a total of 6.1 million barrels a day over the next five years, from 90.6 million barrels a day in 2013 to 96.7 million barrels a day in 2018.
"Growth will remain subdued in 2013, then gain momentum in 2014-15 on stronger economic expansion, and slow down again in 2016-18 on efficiency improvements and fuel switching," the IEA said.
Brent crude, which is a benchmark for many international oil varieties, rose 2 cent to $102.66 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
— Wholesale gasoline lost 0.23 cent to $2.8187 a gallon.
— Heating oil fell 1.97 cents to $2.8713 a gallon.
— Natural gas rose 1.4 cents to $3.939 per 1,000 cubic feet.
Pamela Sampson in Bangkok contributed to this report.