Oil dropped as much as 5% on Tuesday after the International Monetary Fund cut its global economic forecast for 2015 on lower demand for fuel and the key producer Iran hinting that the prices might drop to $25 per barrel without OPEC’s supportive action.
According to Reuters, Benchmark crude dropped 39 cents at $48.45 per barrel after it touched a session low at $47.78.
US crude traded lower by $1.95 at 46.74 after hitting an intraday bottom at $46.23.
Oil prices are hovering close to lows of six years after a seven-month long selloff amid concerns of the glut that is caused by the unexpectedly high US shale crude production.
An expected slide in the US oil rig number in Q1 in comparison with the Q4 of last year also did not boost the sentiment on Tuesday as investors and traders remained glued on concerns of oversupply of oil.
CNBC quoted Price Futures Group analyst, Phil Flynn as having said, “Because we have record oil production now, the falling rig numbers are not creating an immediate positive impact in bolstering prices. In fact, they may be creating just the opposite impact, reminding us how poor demand is.”
Baker Hughes Inc, US oil services firm said that the US average rig count was expected to drop 15% in the first quarter from a quarter ago and it expected to lay off about 7000 staff.
In the latest World Economic Outlook report, the IMF reduced it forecast by 0.3% for this year and next, thus projecting a growth of 3.5% in 2015 and that of 3.7% in 2016.
Bijan Zanganeh, oil minister of Iran said Tehran saw no signs of a shift within OPEC toward action to support the prices of oil and that the industry could ride out further slumps toward $25.
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