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US oil prices sink to two-month low

Wednesday, July 20, 2016 - 06:59
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Oil prices fell to two-month lows in new York Tuesday as the IMF lowered its global growth forecasts citing the impact of Britain's vote to leave the European Union.

[NEW YORK] Oil prices fell to two-month lows in new York Tuesday as the IMF lowered its global growth forecasts citing the impact of Britain's vote to leave the European Union.

The International Monetary Fund said it expects the world economy to expand 3.1 per cent this year, lower than it forecast in April. Slower overall growth would likely dampen the expansion of crude oil demand.

US benchmark West Texas Intermediate for August shed 59 cents to US$44.65 a barrel compared with Monday's close, its lowest since mid-May.

Prices fell in London as well, with the Brent contract for September delivery falling 30 cents to US$46.66.

Market support weakened for a second day after the attempted military coup in Turkey spurred a weekend surge in buying.

In the wake of the coup's failure, "the withdrawal of financial investors and an oversupply of oil products are putting prices under pressure," said Commerzbank analyst Carsten Fritsch.

The market remains wary of the high stockpiles of crude and products around the world, and was on the watch for the US commercial inventories report to be released Wednesday.

"Global inventories remain very high, and the potential impact of growing Iranian exports, Saudi-Iranian competition for market share and weaker global economic growth are some of the factors that could cause oil prices to slip from their current level," Moody's Investors Service said in a note.

"Our medium-term outlook (for crude prices) remains unchanged, and we continue to view this as a challenging time for oil market participants."

AFP