COLUMBUS, Ohio (AP) – Crude prices tumbled Tuesday after the government again lowered its forecast for global energy demand and said average oil prices for this year will likely be below current levels.

Light, sweet crude for April delivery fell $1.36 to settle at $45.71 a barrel on the New York Mercantile Exchange after closing at a two-month high Monday. Prices went into negative territory briefly after the Energy Information Administration released its short-term outlook.

In London, Brent prices rose 76 cents to $44.89 on the ICE Futures exchange.

In early trading, oil looked like it would continue its winning streak that had boosted price to nearly $50 from $33 after Federal Reserve Chairman Ben Bernanke told the Council on Foreign Relations that the U.S. recession could end this year if the government bail out succeeds and markets return to a more normal state. The recession, now in its second year and already the longest in a quarter-century, has turned out to be more severe than the Fed had anticipated, he acknowledged in fielding questions after his speech.

But the market began to turn after the EIA cut its global demand for oil in 2009 by 200,000 barrels a day from its forecast last month. Its projection for global oil consumption this year is now 3 million barrels a day below its forecast from September.

“I think that was the catalyst. No question,” Andrew Lebow of MF Global said as to why prices moved lower.

The report said the future direction of prices will depend on the timing and pace of any economic recovery.

“If economic growth in the United States and overseas rebounds sooner than expected, oil demand could experience stronger-than-expected growth and outpace production increases, leading to rising prices,” the report said.

But any movement in higher prices will be muted by high inventory levels of oil among industrialized countries along with surplus production capacity by the Organization of Petroleum Exporting Countries, the report said.

The report forecasts average oil prices of $42 per barrel for 2009 and $53 in 2010. Gasoline prices should average $1.96 a gallon this year and $2.18 next year.

The report was the first of several that will released over the several days that will influence energy prices.

The American Petroleum Institute will release its U.S crude inventory expectations later Tuesday and on Wednesday, the Paris-based International Energy Agency will release its forecast for global demand.

Also on Wednesday, the U.S. government will release crude inventory levels, which have finally begun to decline after nearing capacity levels as businesses and consumers cut back on energy usage.

Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., expect that the government will report that inventories of both crude and gasoline declined last week.

“Assuming crude imports steadied out at about 9 million barrels per day with no change in refinery inputs, there will likely be another drop in commercial crude stocks,” said Linda Rafield, Platts senior oil analyst.

If forecasts for oil demand are weak, “That may dampen some of the enthusiasm we’ve seen the past couple of days,” said Phil Flynn of Alaron Trading. It could serve as a “reminder what we’re not out of the muck just yet.”

Oil has been getting more resistance as it nears $50, said analyst and trader Stephen Schork, who contends oil has been moving in a range from $35 to $50.

“Traders will continue to do that until when? When it stops working,” he said.

Oil also benefited early from a strong rally that pushed the Dow Jones industrial average up 4.5 percent in trading Tuesday afternoon.

Traders are watching to see whether the OPEC, which produces 40 percent of the world’s crude, cuts output quotas when it meets Sunday in Vienna.

OPEC could announce fresh production cuts of between 500,000 and 1 million barrels a day, said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore.

“If the cut exceeds expectations, there would be a short-term pop in prices,” Chu said. “But it will take months for the cut to affect supplies in the U.S. It’s not an overnight thing.”

Prices at the pump, meanwhile, fell 0.4 cents overnight to $1.941 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Prices are now 2 cents higher than a month ago, but $1.281 lower than a year ago.

In other Nymex trading, gasoline for April delivery fell less than a penny to $1.33 a gallon, while heating oil rose 2.22 cents to $1.2376 a gallon. Natural gas for April delivery fell less than a penny to $3.861 per 1,000 cubic feet.


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