Oil Dips as IMF Cuts Global Growth Outlook

Oil prices slipped on Wednesday after the IMF lowered its global growth forecasts, but markets were supported as Hurricane Michael moved toward Florida causing the shutdown of nearly 40% of US Gulf of Mexico crude production.

Brent crude was down 20 cents at $84.80 a barrel after a 1.3% gain on Tuesday. US light crude was down 15 cents at $74.81, CNBC reported. 

“Oil prices have stabilized for the moment - between a real and a metaphorical storm,” said Fiona Cincotta, senior market analyst at City Index. 

“Hurricane Michael is powering ahead toward the Gulf of Mexico but it now seems likely to miss the main production areas there. On the other hand, Iran sanctions are only weeks away.” 

The International Monetary Fund cut its global economic growth forecasts for 2018 and 2019 on Tuesday, raising concerns that demand for oil may also slump. 

Trade wars and rising import tariffs are taking a toll on commerce, while emerging markets struggle with tighter financial conditions and capital outflows, the IMF said. 

But supply concerns are keeping the market on edge. 

In the United States, nearly 40% of daily crude oil production was lost from offshore US Gulf of Mexico wells on Tuesday because of platform evacuations and shut-ins ahead of Hurricane Michael. 

Michael has strengthened into an “extremely dangerous” Category 4 hurricane, according to the latest advisory from the US National Hurricane Center. 

> Traders' Projections

The world’s biggest trading houses said on Wednesday they saw oil prices not falling below $65 per barrel and possibly breaking above $100 next year due to US sanctions on Iran.

Jeremy Weir, chief executive of Trafigura, said at an oil conference in London that he would not be surprised to see oil trade at more than $100 per barrel next year.

Alex Beard, chief executive for oil and gas at Glencore, said at the same event that he sees the mid-term oil price at $85-90.

The chief executive of Gunvor, Torbjorn Tornqvist, said he saw lower prices next year at $70-$75, citing a slowdown in demand growth and a well-supplied market.