12/10/2014 11:01 EST | Updated 02/09/2015 05:59 EST

Oil dips below $62 US a barrel after OPEC cuts demand forecast

Oil prices resumed their rout today, dipping below $62 US per barrel after OPEC cut its forecast for world demand for oil.

On Tuesday, oil prices had stabilized and moved slightly higher after a two-week spiral downward caused by OPEC’s decision not to pull back on production. At a meeting in Vienna Nov. 27, OPEC said it would keep production targets at 30 million barrels a day.

But on Wednesday, OPEC estimated that world demand for oil in 2015 would be the lowest in 12 years at 28.9 million barrels a day. That’s less than the 30 million barrels a day that the oil cartel’s 12 members pumped last month.

WTI crude traded in New York was down $2.65 to $61.16 a barrel in mid-morning trading. Meanwhile, Brent, the crude contract traded in most of the world, fell $2.22 to $64.57 a barrel.

While OPEC is leaving its production unchanged, it expects non-OPEC supply, driven the U.S., Canada and Brazil, to expand next year by 1.36 million barrels a day to 57.31 million barrels a day.

Supply outstripping demand is a recipe for falling oil prices, which is just what the markets delivered over the last two and a half months.  The WTI price is down 35 per cent since August.

Toronto market in correction

The falling price of oil and OPEC’s dim outlook knocked back Toronto stocks. The market fell 245 points to 13,949 by 11 a.m. ET.

That's a drop of more than 10 per cent since its high in September, an official correction.

The Canadian dollar shed 0.38 of a cent to 87.10 cents US. Energy stocks piled up losses and the financial sector was also hard hit.

Meanwhile, oil companies around the world are starting to rein in spending plans.

British Petroleum announced Wednesday a $1-billion restructuring that will result in the loss of thousands of jobs.

BP has already reduced its 2015 budget by $1 billion to $2 billion, and says further reductions might be on the way because of lower oil prices.

"Given the recent position taken by OPEC and with oil prices where they are today, we will continue to review this further," BP head of upstream Lamar McKay said in a presentation during an investor day in London.