PARIS (AP) -- Oil prices will remain high despite their recent drop and are weighing on demand, especially in developed countries, the International Energy Agency said Tuesday.
The Paris-based energy watchdog said in its monthly report that it's too early to say whether the recent fall in oil prices is the start of a longer-term trend, as demand in developing countries could still offset declines in developed nations that are part of the Organization for Economic Cooperation and Development, or OECD.
"Oil demand data are coming in weaker on an underlying trend basis," the report said. "This only reinforces the view that high prices are beginning to play a central role in determining demand, at least for the OECD countries."
Although crude futures have fallen 20 percent from their early July highs, the price "remains high by any measure, sustaining inflationary concerns, not least in developing importer countries," the IEA said.
Oil prices fell Tuesday in Asia to a 3-month low as a stronger dollar and weakening crude demand from China weighed on investor sentiment.
Light, sweet crude for September delivery fell 65 cents to $113.80 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract lost 75 cents overnight to settle at $114.45 a barrel, the lowest close for a floor session since May 1.
The IEA lowered its forecast for OECD oil product demand this year by 16,000 barrels a day to 48.6 million barrels a day, down 1.3 percent from 2007. The agency forecast a further 1.1 percent decline in OECD oil product demand next year.
"While OECD demand could still surprise us on the downside, non-OECD prospects, particularly for China and the Middle East Gulf, could be subject to upside adjustment," the IEA report said.
"Add in customarily ever-changing sentiment over Iran, and it looks too early to cite definitively a sea change in the market," the report said.
