Oil prices declined on Thursday on lingering concerns that slowing global economic growth may limit fuel demand and after a surprise build in U.S. crude inventories.
“The crude market is now focusing on global growth concerns primarily … It looks to be viewing inventory readings (as) secondary,” said Hue Frame, portfolio manager at Frame Funds in Sydney.
International Brent crude oil futures LCOc1 were at $60.90 a barrel at 0745 GMT, down 24 cents, or 0.4 per cent, from their last settlement.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $52.44 per barrel, 18 cents lower from their last close.
“The IMF downgrading 2019/20 and the continued rhetoric from Davos reiterating that they expect global growth to slow down over the next two years is providing selling pressure in oil,” Frame said.
Earlier this week, the International Monetary Fund (IMF) cut its world economic growth forecasts for 2019 and 2020, due to weakness in Europe and some emerging markets.
World leaders and top executives are meanwhile meeting in Davos, Switzerland, to discuss how to steer policy amid worries of slowing economic growth, damaging trade wars and Brexit.
Oil market sentiment was also weakened by a surprise increase in U.S. crude inventories after refineries cut output, data from industry group the American Petroleum Institute showed on Wednesday.
Crude inventories rose by 6.6 million barrels in the week ended on Jan. 18 to 443.6 million barrels, compared with analyst expectations for a decrease of 42,000 barrels, the API said. Refinery runs fell by 152,000 barrels per day.
The United States has overtaken Russia and Saudi Arabia to become the world’s biggest crude producer with production levels approaching 12 million barrels per day (bpd).
But U.S. oil producers told the Organization of the Petroleum Exporting Countries (OPEC) on Wednesday that investors in U.S. oil companies wanted a reduction in growth and higher payouts.
The bosses of U.S. companies Occidental Petroleum and Hess Corp, attending a session at the World Economic Forum in Davos, said growth in U.S. shale oil output would slow.
OPEC and its non-OPEC allies including Russia have cut output since 2017 to support oil prices.
“Sharp production cuts by OPEC+ have kept crude oil futures supported, however, as market reports indicate for a marked output reduction in Dec 2018,” said Benjamin Lu, analyst at Phillip Futures.
“Though oil prices have demonstrated for higher upside potential in the first quarter of 2019, mounting economic challenges will continue to impede exponential gains in the longer term,” Lu said.
