ANZ Banking Cuts 2009 Oil Outlook on Slowing Demand

By Christian Schmollinger

Oct. 7 (Bloomberg) -- Crude oil prices in New York will average $77 a barrel in 2009, down 27 percent from earlier forecasts, because of slowing demand in the U.S., said Australia & New Zealand Banking Group Ltd.

Oil prices will fall as low as $75 a barrel in June 2009, Mark Pervan, the bank's senior commodity strategist, said in a note today. Crude will average $108 a barrel in 2008, 3 percent lower than the previous estimate, the report said.

Oil has declined 39 percent since reaching a record of $147.27 a barrel on July 11 on increasing concern that the global economy will slip into recession in the wake of the credit crisis. Gasoline demand in the U.S., the world's biggest energy user, averaged 8.9 million barrels a day in the four weeks ending Sept. 26, the lowest in almost three years, the Energy Department said Oct. 1.

``Oil is much more vulnerable to slowing U.S. growth than any other commodity,'' Pervan said in the report. There's a ``clear switch in focus from positive supply issues to deteriorating demand issues'' in the U.S., he said.

Crude prices will rise to average $82 a barrel in 2010 ``as U.S. starts to recover and growing concerns about new supply makes bigger headlines,'' the report said.

Crude oil for November delivery jumped as much as $2.94, or 3.4 percent, to $90.75 a barrel in electronic trading today, and was at $90.11 at 2:38 p.m. Singapore time on the New York Mercantile Exchange.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.