By Sarah McFarlane
Oil prices fell Thursday in tandem with a selloff across global markets on concerns of slowing economic growth, which could ultimately curb oil demand.
Brent crude, the global oil benchmark, was down 1.2% to $82.06 a barrel on London's ICE Futures exchange, having backed-off a four-year high of $86.74 hit last week. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 1.3% at $72.23 a barrel.
Earlier this week, the International Monetary Fund cut its forecasts for global economic growth for both this year and next, citing trade protectionism and instability in emerging markets. A slowdown in economic growth would likely crimp oil demand which analysts say is already at risk from rising oil prices.
Oil prices were also under pressure from expectations of bearish weekly data from the U.S. Energy Information Administration. The average forecast of analysts surveyed by The Wall Street Journal was for a 1.5-million-barrel increase in crude inventories for the week ended Oct. 5. Industry group the American Petroleum Institute said Wednesday that its own data showed a much larger 9.7 million barrel increase, according to a market participant.
"The de-risking that we saw in equity markets swept other markets with it, including oil, where the move was compounded by API data and EIA forecasts," said Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas.
In the EIA's latest short-term energy outlook, published on Wednesday, increased its U.S. production forecast to a record 11.8 million barrels a day in 2019.
On a fundamental basis, however, the overall bullish picture for oil remains intact, with further losses of production from Iran and Venezuela expected. Plus, any economic slowdown is unlikely to happen so quickly as to have an adverse impact on oil demand in the near term, Mr. Tchilinguirian said.
Helping limit losses were ongoing revisions to the volume of Iranian oil expected to be lost form the global market due to the reinstatement of U.S. sanctions on Nov. 4.
Speaking at the Oil & Money conference in London on Wednesday, Jeremy Weir, the chief executive of oil trader Trafigura Group, said he expected oil prices could reach $100 a barrel by the first quarter of 2019, in part due to the sanctions on Iran.
"The Iranians peaked at 2.7 million barrels of exports, the market consensus started at about a reduction of 0.5 million barrels, it has quickly gone to 1 million, and possibly could even get to 2 million barrels, so it's significant to the industry," said Mr. Weir.
Nymex reformulated gasoline blendstock -- the benchmark gasoline contract -- rose 1.7% to $1.99 a gallon. ICE gasoil changed hands at $729.75 a metric ton, down $9.50 from the previous settlement.
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(END) Dow Jones Newswires
October 11, 2018 05:35 ET (09:35 GMT)
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