11/07/2013 06:06 EST | Updated 01/23/2014 06:58 EST

Crude oil drops to near US$94 a barrel as ECB rate cut boosts dollar

The price of oil fell Thursday as an unexpected rate cut by the European Central Bank strengthened the U.S. dollar and OPEC said global crude supplies are abundant.

Benchmark West Texas Intermediate crude for December delivery fell 60 cents to US$94.20 a barrel on the New York Mercantile Exchange. Brent crude, the international benchmark, fell more sharply, dropping $1.78, or 1.7 per cent, to US$103.46 a barrel on the ICE Futures exchange in London.

Aiming to encourage Europe's modest growth rate, the ECB cut its benchmark interest rate to a record low 0.25 per cent, a move not generally expected until at least next month.

The cut weakened the euro and strengthened the dollar, making commodities like crude more expensive for traders using currencies other than the U.S. currency. The euro was down to $1.3365 from $1.3520 before the rate cut was announced.

Meanwhile, a report from some of the world's key oil producers that forecast rising energy supplies in the coming years also weighed on prices.

The Organization of Petroleum Exporting Countries said it expects demand for its crude oil to fall to 29.2 million barrels a day in 2018 from 30.3 million barrels a year this year. OPEC said rising supplies from other sources, such as Canadian oilsands, crude from Latin America and the increased use of biofuels, would contribute to the fall in demand for its own output.

"This year's (report) demonstrates again that there is no shortage of oil and resources are plentiful," OPEC Secretary-General Abdullah Al-Badry said in the group's 2013 World Oil Outlook report.

OPEC also predicted that global oil demand would rise from 81.2 million barrels a day in 2013 to 89.7 million barrels a day in 2020 and 100.2 million barrels a day in 2035. At the same time, renewables and other fuels will cut into oil's share of global energy use.

In other energy futures trading on Nymex, wholesale gasoline fell four cents to US$2.50 a U.S. gallon (3.79 litres), heating oil lost three cents to US$2.84 a gallon and natural gas gained two cents to $3.52 per 1,000 cubic feet.