Oil prices
An oil refinery located on a branch of the Druzhba oil pipeline, which moves crude oil westwards to Europe, is pictured near Mozyr, BelarusReuters

Crude prices continued southwards after the International Energy Agency (IEA) said it sees lesser oil demand over next 18 months, pushing Brent for spot delivery to its lowest in just over a year, and breaking a significant support barrier.

The August oil market report (OMR) said that 2014 oil demand would rise by 1.0 million barrels a day to 92.7 mbd compared to its July forecast of 1.2 mbd.

Brent crude for immediate delivery fell to $102.34/bbl, its lowest since July last year and from the previous close of $102.86. The commodity has dropped 1.9% so far after the report.

The IEA has cut its 2015 demand forecast to 94 mbd down by 300,000 barrels from the previous prediction.

The Agency said that International Monetary Fund's weaker outlook for global economic growth is the main reason for a downward revision of the oil consumption outlook.

Brent crude for immediate delivery fell to $102.34/bbl, its lowest since July last year and from the previous close of $102.86. The commodity has dropped 1.9% so far after the report.

Technically, spot Brent has fallen below the $104.0-103.0 support region, which has been held for quite a while, opening up new lows for the commodity.

Analysts said the easing of geopolitical tensions in Israel-Gaza and Russia-Ukraine borders has set the background for the commodity to drop off on such a report.

The US IEA natural gas storage data in the recent weeks show that inventories have not declined much from the multi-year high touched in June, which is another indicator for lower demand for fuels.

The West Texas Intermediary (WTI) crude for spot delivery fell to $96.84 on Wednesday, a six-month low.

Brent Technical Outlook

Brent spot has broken below the $104.70 support on the August OMR and the attempt further south managed to break the very important support region of $104-103.

That move has exposed $101.50 and $100, a psychologically important barrier, before a retest of $96.70, the April 2013 low.

On the higher side, $104.70 has turned a resistance now and the next will be $106.80 and $109.50, the 50% and 38.2% Fibonacci retracements of the April 2013 to August 2013 rally.

Further north, the commodity will have stops at $112.50 ahead of $115.70 and $117.30, the August 2013 high.

Brent Crude Daily
Brent Crude DailyIB Times UK/FXStreet