Oil falls again as IMF cuts forecast; Iran assumes at $25 oil
Oil fell in so far as 5% on Tuesday after the International Monetary Fund (IMF) cut its 2015 global economic outlook on lower fuel demand and main producer Iran implied prices could fall to $25 a barrel without supportive OPEC action.
An estimated slide in the U.S. oil rig count in the first quarter contrasted with the fourth quarter of last year failed to increase sentiment as traders and investors remain glued on concerns of oil oversupply.
Oil prices are hovering near six-year lows after a seven-month long sell-off on worries of a glut caused mainly by surprisingly high production of U.S. shale crude.
Benchmark Brent crude was down 48 cents at $48.36 a barrel by 1533 GMT, after touching a session low at $47.78. U.S. crude traded down $2.12 at $46.57, after an intraday bottom at $46.23.
“Because we have massive oil production now, the falling rig numbers are not creating an instant positive impact in bolstering prices,” said Phil Flynn, analyst at Price Futures Group in Chicago. “Indeed, they may be creating just the reverse impact; reminding us how low demand is.”
U.S. oil services firm Baker Hughes Inc said in its conference call presentation on Tuesday the U.S. regular rig count was estimated to decline 15% in the first quarter from a quarter ago, and it projected to lay off some 7,000 staff.
Prior data from Baker Hughes showed the number of rigs drilling for oil in the United States decrease by 55 last week; the second-sharpest weekly fall in 24 years.
The IMF, in its most recent World Economic forecast report, decreased its forecast by 0.3 percentage points for this year and next, estimating a 3.5 percent growth in 2015 and 3.7 percent for 2016.
“New issues supporting growth – lower oil prices, but also reduction of euro and yen – are more than offset by persistent negative forces,” said Olivier Blanchard, the IMF’s chief economist.
Iran’s Oil Minister Bijan Zanganeh said Tehran spotted no signs of a shift within OPEC toward action to support oil prices, and that the industry could ride out a further slump toward $25.