Oil prices near $87 after OECD cuts EU, U.S. growth outlook

PanARMENIAN.Net - The price of oil hovered near $87 a barrel Wednesday, Nov 28, after the Organization for Economic Cooperation and Development cut its growth outlook for the U.S. and the 17 countries that use the euro currency, The Associated Press reported.

Benchmark oil for January delivery was up 4 cents to $87.22 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell 56 cents to finish at $87.18 a barrel on the Nymex on Tuesday.

The Paris-based OECD said Tuesday that the combined economy of the 17 euro countries will contract by 0.4 percent this year, worse than May's 0.1 percent forecast. For 2013, it will contract a further 0.1 percent.

The OECD also downgraded its forecasts for the U.S. economy. Even if the White House and Congress strike a budget deal before Jan. 1 and avoid the so-called fiscal cliff of automatic tax hikes and spending cuts, the OECD said the U.S. will grow by only 2 percent next year, down from May's forecast of 2.6 percent.

Traders said weak economic growth would likely hurt demand for energy.

Michael Hewson, senior market analyst of CMC Markets, said the OECD report refocused concerns on "the toxic effect the European crisis continues to have on global growth prospects."

Brent crude, which is used to set prices for many international varieties of oil, fell 7 cents to $109.80 a barrel on London's ICE Futures exchange.