Oil prices drop on weak demand forecasts

Crude oil prices sank on Monday, dented by a drop in energy demand expectations as the world faces the risk of renewed recession, analysts said. New York's main contract, light sweet crude for delivery in October, slid $1.22 to $86.02 a barrel. Brent North Sea crude for October delivery shed $1.32 to $111.45 approaching midday trade in London. OPEC on Monday lowered its world oil demand forecast for 2011 and 2012, citing the poor economic climate. Oil demand for this year was set at 87.99 million barrels per day, down from a previous forecast of 88.14 million bpd, the Organization of Petroleum Exporting Countries said in its latest monthly report. The 12-member cartel blamed the revision on a weaker-than-expected demand in the United States and ongoing effects of the financial crisis, which was dragging down demand in China and India. "In our early oil demand forecast, we warned of a downward risk due to a further weakening in the global economy," OPEC said in its report. "The projected downside risks are already materialising, dragging world oil demand growth down." For 2012, demand was expected to average 89.26 million bdp, down from the August estimate of 89.44 million bpd but still up 1.27 million bpd from 2010, OPEC added. It cited "considerable uncertainty in total world economy in 2012" and warned that a poor US economic performance could lower demand even further.