Global oil prices suffer over worries about demand fall

Oil prices in international markets are expected to come under renewed pressure as fears grow globally that recent terror attacks in Paris may further slow the global economy, lowering crude demand.

According to market analysts, oil is already being traded at near six-year lows and relatively good demand has been the most important factor that has prevented the prices from going any lower as global oil glut keeps worsening, Reuters reported on Sunday.

A series of coordinated terrorist attacks in the French capital claimed the lives of at least 129 people on Friday evening, following which Daesh terrorist group claimed responsibility for the bloodshed.

"Currently sentiment is really bearish, so this could be seen as hurting demand, so oil prices could fall further," said Amrita Sen from Energy Aspects.

Sen, however, added that a short-term sell-off could be followed in the mid-term by an upturn in oil price if people reach the conclusion that Paris attacks could seriously escalate tensions in the Middle East.

According to analysts from Eurasia Group, the attacks will probably undermine the French government's ability to focus its attention on the country’s improving economy.

In the meantime, as financial repercussions of Paris attacks broaden, global stocks are set for a short-term sell-off, though few strategists expect a prolonged economic impact or change in prevailing market directions.

ActivTrades chief analyst, Carlo Alberto de Casa, and Ed Meir, an analyst at INTL FCStone, both were quoted by Reuters as saying that they expect a moderate rebound in gold prices given that equities and commodities were poised to be hit.

"People in France are in shock. They are not doing much shopping and that could last for a few days," said Olivier Jakob from Petromatrix consultancy, who added, "The rest of the world is not as deeply affected to change consumer behaviour."

Jakob, however, opined that the bearish impact of Paris attacks would likely be short-lived, saying, "The attack could however result in a re-calibration of France's foreign policy and positioning in the Middle East."

Meanwhile, an OPEC delegate from a Persian Gulf oil-producing country said he also believed that in the mid-term, oil prices would relatively pick up due to rising geopolitical tensions, especially if the international community takes steps to reduce oil smuggling and hits oil facilities under control of Daesh in Syria and Iraq.

Despite the aforesaid facts, the OPEC delegate, who was not named in the report, agreed that the short-term impact of the attacks may put downward pressure on oil prices, saying, "Certainly any more controls -- though it ensures safety of travelers – will reduce transport."

The delegate added that the reaction shown by the markets would depend on the severity and the length of any restrictions enforced across France and the rest of Europe.

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