Oil Pump France
Oil pump.Reuters

Crude-oil futures dropped to an over five-year low on 12 December, and finished lower for the week, after the International Energy Agency (IEA) became the latest energy watchdog to announce a reduction in forecasts for global oil demand growth.

The Brent January contract finished $1.83, or 2.9%, lower at $61.85 a barrel on Friday, its lowest settlement since 14 July, 2009.

The global benchmark shed 10% for the week as a whole.

The US January contract finished $2.14, or 3.6%, lower at $57.81 a barrel on Friday, its lowest since May 2009.

WTI shed a little more than 12% for the week.

Both Brent and US crude have lost more than 45% of their value since a peak in June this year.

Citi Futures analyst Tim Evans told MarketWatch: "A stronger US dollar and ongoing concern over a projected 2015 surplus maintained a steady downward pressure on prices."

IEA Forecast

The IEA on 12 December cut its global oil demand growth forecast for the fourth time in five months, this time on a weaker outlook for oil exporting countries: the economies of producer nations were being hurt by falling prices.

The energy watchdog also said that oil cartel Opec, which pump's a third of the world's oil, will need to pump an average of 28.9 million barrels a day in 2015, about 1.4 million less than what its 12 members produced in November.

In addition, the agency warned Friday that weak demand and an oversupply in oil markets could raise the risk of global social instability and the possibility of financial defaults.

Opec Trims Outlook

Earlier in the week, Opec trimmed its forecast for demand for its oil by 300,000 barrels a day, to 28.9 million a day in 2015, as against 29.4 million barrels a day in 2014.

The US Energy Information Administration (EIA) also lowered its demand forecasts for 2015 this week.

Crude oil prices have fallen hard on oversupply concerns and on fears surrounding weak demand from China, the world's second largest oil consumer after the US.

In late November, Saudi Arabia and other rich Gulf producers resisted pressure from poorer Opec members, notably Venezuela, to cut oil output amid a glut in the global oil market.

Supplies have been boosted in the wake of the US shale boom.