Oil prices fell below $91 a barrel on Wednesday to their lowest since June 2012, holding to a months-long tumble in prices as lower economic growth forecasts raised new concerns about global oil demand amid rising US inventory levels.
The International Monetary Fund on Tuesday cut its global economic growth forecasts for the third time this year, warning of weaker growth in core eurozone countries, Japan and big emerging markets like Brazil.
While the IMF kept the growth outlook for China, the world’s second biggest oil consumer, unchanged at 7.4 per cent for this year, it saw the risk of a hard landing in the medium term due to concerns over excess industrial capacity and credit issues.
Asian investors were worried about overnight economic data from Germany that showed industrial output fell by a larger-than-expected 4 per cent in August, the biggest drop since the financial crisis in 2009.
Brent for November delivery fell $1.16 to $90.95, after hitting $90.76 earlier in the session, its lowest point since June 2012.
Oil prices have trended lower on oversupply and weak demand since mid-June, when Brent hit a nine-month high of $115.71.
West Texas Intermediate for November delivery dropped $1.07 to $87.79 a barrel, after falling to $87.39 earlier in the session, its lowest since April 2013.
US crude stocks climbed by 5.1 million barrels to 360 million in the week to October 3rd, according to an inventory report on Tuesday from industry group the American Petroleum Institute (API). This was much larger than the build of 1.5 million barrels expected by analysts polled by Reuters.
China's services sector weakened slightly in September as new business cooled, reflected in the services purchasing managers' index (PMI) compiled by HSBC/Markit and released on Wednesday. The marker pulled back to 53.5 in September from a 17-month high of 54.1 in August.
Oil prices could fall further by the weekend although this would depend on how the dollar performed.
The dollar index was at 85.841 in trade on Wednesday, off a four-year peak of 86.746 hit on Friday.
Geopolitical tensions could still provide some support to oil prices, but conflicts in the Middle East, North Africa and Ukraine have so far had only limited impact on crude output.
As fighting continued between Kurdish and Islamic State fighters for control of the Syrian Kurdish town of Kobani, the United States stepped up discussions with Turkey on Tuesday over its role in a US-led coalition fighting the Islamist militants in Syria.
Libyan oil production has slipped below 900,000 barrels per day (bpd), down from as high as 925,000 bpd last month, due to a sit-in protest at Sirte Oil Co by local residents demanding jobs, a source at the National Oil Corporation said on Tuesday.
Reuters
