Output predictions calms oil market

Gold was higher in commodities trading on Tuesday, but trade was light. Copper hit a record high in Asia, coming in $10 higher than London’s Monday high amid fears created by a lack of supply in Shanghai.

But the real news Tuesday was a lowering of predictions of world oil demand in 2005 as the International Energy Agency (IEA) lessened demand predictions for the year by 50,000 barrels a day.

There are a number of reasons for this alteration of predicted demand. Demand for oil is down in Russia and in the former Soviet states. There are more oil supplies available than previously estimated.

Demand for oil in China is slowing. OPEC has said that it will increase oil production. Also, early fears that second-quarter oil demand in China would rise have lessened.

Even the reality of tight gasoline supplies in the U.S. as the summer driving season approaches did not alter the IEA’s new projections because European inventories are high.

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