Oil is back to losing ways after a moderate rally following yet another drop in US Crude inventories. The International Energy Agency (IEA) noted in its monthly Oil Market Report that risks were starting to build to its forecast that the market would reach supply and demand equilibrium later this year. The existence of very high oil stocks is a threat to the recent stability of oil prices, the IEA said. The commodity eased to its two month low following this, breaking under $45 per barrel mark for WTI futures. MCX Crude oil futures also slipped under the key Rs 3000 per barrel mark following the global price action.
Commercial crude oil stockpiles in the US fell by 2.3 million barrels in the week to July 15, the Energy Information Administration (EIA) reported. The total tally was 519.5 million barrels, excluding strategic inventories, still an unusually high amount for this time of year. The EIA noted that US Refinery inputs over the seven-day reporting period averaged 16.9 million barrels a day, compared with 16.5 million barrels a day in the previous week, when refineries operated at 92.3% of capacity.
Global growth worries are likely to weigh on sentiments in near term. The International Monetary Fund (IMF) lowered its global economic outlook, following the increased uncertainty caused by Britain’s vote to leave the European Union. The latest IMF world economic outlook cut its 2016 and 2017 global growth forecast by a tenth each year, compared to the agency’s outlook in April. Of the advanced economies, the UK sees the biggest reduction, of two-tenths in 2016 and 0.9 percentage points in 2017.
Maurice Obstfeld, the IMF economic counselor, said the agency had prepared to upgrade its global growth assessment before the so-called Brexit vote, because of better-than-forecast Eurozone and Japan growth, and a recovery in commodity prices. The IMF downgraded its forecasts for global growth this year and next by 0.1 percentage point, to 3.1% and 3.4% respectively. The biggest downward revision was of course to the UK, which the Fund now expects to grow by just 1.3% in 2017, almost a percentage point slower than its previous forecast.
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