Crude oil futures moved lower during mid-morning trade in Asia Tuesday following the release of the latest International Monetary Fund report, where it downgraded its oil price and growth forecasts for 2019, while market participants waited for fresh price cues from the US inventory reports due later this week. At 10:40 am Singapore time (0240 GMT), ICE March Brent crude futures was down 37 cents/b (0.59%) from Monday’s settle at $62.54/b, while the NYMEX February light sweet crude contract was 31 cents/b (0.58%) lower from Friday’s settle at at $53.86/b.
The IMF on Monday published its World Economic Outlook in which it cut its forecast for average oil prices to just below $60/b in 2019 on concerns about global economic growth. It pointed to the increased volatility in oil prices since August 2018 due to the influences of US policy on Iranian oil exports and more recently fears of weakening global demand. Crude prices hit a peak of $86/b in October as some in the market spoke of a return to $100/b oil before plunging to just below $50/b in late December.
The IMF predicted the global economy would grow 3.5% this year compared with an estimated 3.7% in 2018, and marks a downward revision from its October forecast, highlighting the risks from trade tensions between US and China. A “greater-than-envisaged slowdown in China” was one of the factors that tilted global growth risks to the downside, the IMF said. However, it kept its growth forecasts for China, which accounts for around a third of global growth, unchanged. Market participants are watching out for any developments around the ongoing trade tensions between US and China with the latest update being that Beijing was considering ramping up US imports by more than $1 trillion in an effort to reduce the US-China trade imbalance to zero by 2024.