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Oil slides as IMF cuts global growth forecast
[LONDON] World oil prices fell on Tuesday after the International Monetary Fund slashed its world economic growth forecast, stoking fresh fears over the strength of global crude demand.
In late afternoon London deals, Brent North Sea crude for delivery in March dropped 55 cents to US$48.29 (S$64.60) a barrel.
US benchmark West Texas Intermediate for February sank US$1.97 to trade at US$46.72 per barrel.
"Oil prices fell back ... dented by the global demand outlook suggested by the IMF," said Jasper Lawler, analyst at CMC Markets.
The International Monetary Fund on Tuesday sharply cut its forecast for global economic growth this year to 3.5 per cent, on the back of weaker momentum in nearly all leading economies but the United States.
It said poorer prospects in China, Russia, the euro area and Japan would also hold world growth to just 3.7 per cent in 2016.
Both estimates were 0.3 percentage points lower than in the IMF's previous World Economic Outlook forecasts in October, and underscored the steady deterioration of the economic picture for many countries.
"Crude oil prices remain under heavy pressure with WTI front month futures retreating ... following news that the IMF cut its global growth forecast by most in three years," added Sucden analyst Myrto Sokou.
"Brent front month futures fluctuated ... amid concerns regarding a further slowdown of global oil demand." Crude futures had also fallen in earlier Asian trading hours, hit by weak global demand and an oversupply.
"We see no near-term catalysts that would change the supply/demand equation," credit ratings firm Moody's said in a market commentary.
It said the drop in crude prices by more than half between June last year and this month reflected an increase in US production, a slow rise in worldwide demand and oil kingpin Saudi Arabia's decision "not to keep acting as OPEC's - and the world's - swing producer".
Saudi Arabia is the major producer in the Organisation of Petroleum Exporting Countries (Opec) cartel, which decided in November to leave crude output unchanged, further pressuring prices.
Moody's said it has lowered its price assumptions for Brent crude to US$55 a barrel through 2015 and US$65 in 2016.
It also lowered its price assumption for WTI to US$52 a barrel through this year and to US$62 in 2016.