Oil, heading for its first quarterly decline since the end of 2008, may fall in the second half on signs that the economic recovery in developed countries is slowing.

“Getting out of the worldwide recession was always going to be a long slog,” Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington, who forecast oil will average $65 a barrel in the third quarter and $70 in the fourth, said in an interview. “It’s always been our view that the second half of 2010 was going to be a tough period.”
The U.S. Energy Department trimmed its crude-oil demand and price forecasts for 2010 this month. World consumption will average 85.51 million barrels a day this year, down from the 85.55 million predicted in May, the department said June 8.
West Texas Intermediate oil, a global benchmark blend, will average $78.75 this year, down from $82.18 forecast in May, the department said.
Crude has declined as the dollar strengthened, reducing the investment appeal of commodities. The Dollar Index, which gauges the currency against those of six major U.S. trading partners, gained more than 10 percent this year amid concern European nations will default. The European Union put together a 750 billion-euro ($921 billion) rescue package on May 10 to stop the crisis from spreading.
We did avoid a financial meltdown in Greece and Spain but otherwise the picture in Europe is grim,” said David Kirsch, a Paris-based analyst with PFC Energy, an energy strategist to companies and governments. “We’re looking for poor demand throughout the OECD. The U.S. only looks good in comparison with the EU and Japan.”
(Source: Bloomberg)