Brent crude oil prices steadied around $49 a barrel on Tuesday after the International Monetary Fund cut its forecast for global economic growth in 2015 implying lower demand for fuel.
Global growth is projected at 3.5 per cent for 2015 and 3.7 per cent for 2016, the IMF said in its latest World Economic Outlook report, reducing its forecast by 0.3 percentage points for both years.
“New factors supporting growth – lower oil prices, but also depreciation of euro and yen – are more than offset by persistent negative forces,” said Olivier Blanchard, the IMF’s chief economist.
Brent crude was up 16 cents at $49.00 a barrel by 1225 GMT. U.S. crude, also known as West Texas Intermediate or WTI, was trading at $47.52, down $1.17 from Friday’s close. U.S. markets were closed on Monday for a public holiday.
BNP Paribas analyst Harry Tchilinguirian said the IMF forecast cut was widely expected.
“We’re still trading sub $50 on both WTI and Brent, I think that’s really the main message,” he said.
Oil prices have dropped by more than half since June as output has soared while demand growth has slowed.
Members of the Organization of the Petroleum Exporting Countries have said they are leaving the oil market to find its own level and hope lower fuel prices will stimulate more demand in the long run.
“We are having an adjustment in prices to the new oil order that has been imposed on OPEC,” said Tchilinguirian.
Cartel member Nigeria said on Tuesday the Trans Forcados oil and gas pipeline and related production have been shut down after vandalism at the weekend caused an oil spill.
Oil major Shell said Nigeria’s Trans Escravos and Nembe Creek pipelines had also been closed.
Weak economic data from China on Tuesday put downward pressure on oil markets.
The world’s second-largest economy and biggest energy consumer grew 7.4 per cent last year, China’s National Bureau of Statistics said, less than the target of 7.5 per cent and its weakest annual expansion in 24 years.
But China’s implied oil demand grew three per cent in 2014, consuming roughly 10.06 million barrels per day (bpd) of oil in 2014, according to Reuters calculations.