Crude oil prices fell ahead of the latest US weekly inventories data with Nymex December West Texas Intermediate down 64 cents to $78.64 a barrel, while ICE December Brent lost 50 cents at $77.45 a barrel.
US crude stocks were forecast to have risen 700,000 barrels last week, according to an expanded poll of analysts by Reuters.
Demand for crude from refiners remains soft because of poor profit margins and almost one-fifth of US refining capacity is currently lying idle.
However, distillate stocks were forecast to have fallen 300,000 barrels as recent colder weather should have boosted demand for heating oil, while petrol stocks were seen as unchanged.
On Thursday, the International Energy Agency, the energy watchdog of the west, forecast that global oil demand would grow in the fourth quarter for the first time in over a year.
The IEA revised its 2009 global demand forecast to 84.8m barrels a day and said it expected 2010 consumption to increase 1.3m b/d to average 86.2m b/d next year.
The IEA also warned that WTI’s reign as the global oil price benchmark looked “increasingly precarious” after Saudi Aramco announced in late October that it was planning to drop the contract as the basis for pricing its sales to the US.
Instead, Saudi Aramco will use the recently launched Argus Sour Crude Index (ASCI) as a basis for pricing from January 2010 as ASCI is more closely related to its own grades of crude oil.
The IEA said Saudi Arabia’s switch from WTI as a pricing benchmark was expected to trigger a similar shift by other sellers. About 5m b/d of US imports are pegged to WTI prices.
“Arguably US WTI has been the most important price benchmark for several decades, but its fall from grace was long in the making,” said the IEA, which also noted that the contract still had “an important role to play” in spite of its inherent logistical flaws.