Oil Prices Fall 5% After IMF Cuts Growth Outlook – By ASC

Oil prices fell about 5% in volatile trade on Tuesday on demand concerns after the International Monetary Fund (IMF) cut its economic growth forecast and warned of higher inflation.

Oil prices fell about 5% in volatile trade on Tuesday on demand concerns after the International Monetary Fund (IMF) cut its economic growth forecast and warned of higher inflation.

Brent crude, the global benchmark, fell $ 5.91, or 5.22%, to close at $ 107.25 a barrel, while US West Texas Intermediate fell $ 5.65, or 5.22%, to close at $ 102.56 a barrel.

Prices fell despite lower production than OPEC+, which produced 1.45 million barrels a day (bpd) below its target in March, when Russian production began to decline following sanctions imposed by the West over its aggression on Ukraine, according to a report from the producers alliance. seen by Reuters.

Russia produced about 300,000 bpd below its target in March at 10.018 million bpd, based on secondary sources, the report showed.

OPEC+, which groups OPEC and its Russian -led allies, agreed last month to increase monthly oil production by 432,000 bpd for May, resisting pressure by major consumers to pump more.

The IMF lowered its forecast for global economic growth to nearly a full percentage point, citing Russian aggression, and said that inflation is now a “clear and present danger” for many countries.

The bearish outlook added to price pressure from the dollar trading at a two -year high. A stronger U.S. dollar makes dollar -denominated commodities more expensive for holders of other currencies, which can hurt demand. [USD/]

Federal Reserve Bank of Chicago president Charles Evans on Tuesday said the Fed could increase its policy target range to 2.25% to 2.5% by the end of the year, but if inflation remains high it will likely need to raise rates further.

Meanwhile, the President of the Federal Reserve Bank of St. Louis James Bullard said on Monday that U.S. inflation was “far too high” as he repeated his case for raising interest rates to 3.5% by the end of the year to slow what is now a 40-year-high inflation reading.

The IMF’s lower growth forecast, along with the Strategic Petroleum Reserve reporting that emergency stocks fell by 4.7 million barrels on Monday, “caused a bit of anxiety,” said Phil Flynn, an analyst at Price Futures Group.

Concerns over demand growth are already in the spotlight after a preliminary Reuters survey on Monday showed U.S. crude oil inventories were likely to rise last week.

China’s economy slowed in March, exacerbating an already weakened outlook by COVID-19 sanctions and the conflict in Ukraine.

Fuel demand in China, the world’s largest oil importer, could start to rise as manufacturing plants prepare to reopen in Shanghai.

The drop in prices on Tuesday followed a rise of more than 1% on Monday, when oil prices hit their highest level since March 28 following a disruption in Libyan oil supplies. The Libyan National Oil Corporation (NOC) warned on Monday of a “painful shutdown wave” and declared force majeure on some production and exports as the military in the east extended their sanctions on the sector due to political stalemate.

The NOC on Tuesday declared force majeure at the Brega oil port.

United Kingdom Prime Minister Boris Johnson in a call with Western leaders on Tuesday underlined the need to increase pressure on Russia with more sanctions and diplomatic isolation.

The possibility of a European Union ban on Russian oil continues to keep the market on the edge. French Finance Minister Bruno Le Maire on Tuesday said that sanctions at the EU level were in the works.

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(This story has not been edited by NDTV staff and is automatically generated from a syndicated feed.)

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