Oil futures fell below $94 a barrel on Wednesday to log their lowest settlement in four weeks after the OECD cut its global growth forecast and the International Monetary Fund reduced its estimate for China’s growth.
The lowered forecasts fed concerns over the outlook for energy demand as traders mulled over what members of the Organization of the Petroleum Exporting Countries may decide to do with output targets at their meeting in Vienna on Friday.
Crude for July delivery +0.08% fell $1.88, or 2%, to settle at $93.13 a barrel on the New York Mercantile Exchange. Tracking the most-active contracts, that was the lowest price settlement since May 1, according to FactSet data.
On Tuesday, oil prices saw a gain of 86 cents, or 0.9%, finding support from prospects for higher energy demand afterconfidence among U.S. consumers climbedto a five-year high.
But Wednesday’s Nymex session saw “a real flip-flop in sentiment,” said Matt Smith, a commodity analyst at Schneider Electric in Louisville, Ky. “The IMF’s downward revision to China’s growth prospects combined with fears” of the U.S. Federal Reserve removing stimulus and European Central Bank Vice President Vitor Constancio saying the euro zone’s situation “remains fragile.”
The IMF’s first deputy managing director, David Lipton, said Wednesday that the IMF cut its estimate for China’s economic growth in 2013 and 2014 to 7.75%. It previously estimated growth of 8% for this year and 8.2% next year.
Separately, the Organization for Economic Cooperation and Development warned that when the U.S. Federal Reserve and others start tapering their monetary-easing programs, that will likely cause spikes in government-bond yields and put growth in the global economy at risk.
The OECD said the U.S. economy is still expected to grow, though at a slightly lower rate than previously thought. It predicts a rate of 1.9% in 2013, down from an earlier estimate of 2.0%.
After the Nymex session ended Wednesday, the API reported across-the-board increases in petroleum stockpiles.
Crude supplies jumped 4.4 million barrels, while a Platts survey of analysts showed a forecast for a 1.5 million-barrel decline.
Gasoline inventories climbed 1.9 million barrels and distillate stockpiles rose by 3.1 million barrels. Analysts were looking for a decline of 800,000 barrels in gasoline inventories and a fall of 600,000 barrels in distillate supplies.
The Energy Information Administration will follow with its own supply data Thursday at 11 a.m. Eastern.