NEW YORK: Oil fell as much as 5 percent on Tuesday after the International Monetary Fund cut its 2015 global economic forecast and key producer Iran hinted prices could drop to $ 25 a barrel without supportive OPEC action.
Genscape, an analytics firm that monitors US oil stocks, reported a 2.6 million-barrel build last week in Cushing, Oklahoma, the delivery point for the US crude futures contract, adding to the market’s bearish sentiment, traders said.
Trade group American Petroleum Institute will issue its data on US crude inventories for last week on Wednesday while the government’s Energy Information Administration will release its stockpile tally on Thursday, both delayed a day by a holiday on Monday.
Benchmark Brent crude LCOc1 closed down 85 cents, or 1.8 percent, at $ 47.99 a barrel. It earlier touched a session low of $ 47.78.
US crude CLc1 settled down $ 2.30, or 4.7 percent, at $ 46.39 a barrel, after tumbling to an intraday bottom of $ 45.89. Traders said activity in US crude was heightened somewhat by the expiry of the February futures contract CLG5 as the front-month.
Oil prices are hovering near six-year lows after a selloff on worries of a glut caused primarily by unexpectedly high production of US shale crude.
An expected slide in the US oil rig count in the first quarter compared with the fourth quarter of last year failed to boost sentiment on Tuesday as traders and investors remain focused on concerns of oil oversupply.
“Because we have record oil production now, the falling rig numbers are not creating an immediate positive impact in bolstering prices,” said Phil Flynn, analyst at Price Futures Group in Chicago. “In fact, they may be creating just the opposite impact; reminding us how poor demand is.”
US oil services firm Baker Hughes Inc said in a conference call on Tuesday that the US average rig count was expected to decline 15 percent in the first quarter from the previous quarter, and it expected to lay off some 7,000 staff.
Earlier data from Baker Hughes showed the number of rigs drilling for oil in the United States fell by 55 last week, the second-sharpest weekly drop in 24 years.
The IMF, in its latest World Economic Outlook report, reduced its global economic forecast by 0.3 percentage points for this year and next, projecting a 3.5 percent growth in 2015 and 3.7 percent for 2016.
Iran’s Oil Minister Bijan Zanganeh said Tehran saw no signs of a shift within OPEC towards action to support oil prices, and that the industry could ride out a further slump toward $ 25.