Oil prices edged lower on Tuesday, slipping off five-month highs after the International Monetary Fund cut its global economic growth forecasts and as Russia signalled it may retreat from its production-cutting deal with OPEC. A US threat to slap tariffs on hundreds of European goods halted a rally in global equities, which also dragged on oil futures.
Brent settled at $70.61 a barrel, falling 49 cents after hitting $71.34, its highest since November. US crude settled at $63.98 a barrel, down 42 cents, after also reaching a five-month high of $64.79. "I think the IMF lowering global growth is really the biggest headwind today that oil futures are seeing," said Phil Streible, senior commodities strategist at RJO Futures in Chicago.
The International Monetary Fund (IMF) on Tuesday cut its global economic growth forecasts for 2019 and warned growth could slow further due to trade tensions and a potentially disorderly British exit from the European Union. The IMF downgrade, its third since October, added to concerns a slowdown this year will hit fuel consumption and prevent crude prices from rising even higher.
Prices also faltered as Russia, a participant in the OPEC-led supply cuts that expire in June, signalled on Monday it wants to raise output when it next meets with OPEC because of falling stockpiles. On Tuesday, President Vladimir Putin said Russia did not support an uncontrollable rise in oil prices and that the current price suited Moscow.
"We are ready for cooperation with OPEC in decision-making ... But whether it would be cuts, or just a stoppage at the current level of output, I am not ready to say," Putin told an Arctic conference in St. Petersburg. US sanctions on Iran and Venezuela have deepened the OPEC supply cut and concern has grown this week about the stability of Libyan output. The OPEC member pumps around 1.1 million barrels per day, just over 1 percent of global supply.
Rising US crude production and inventories continued to weigh on the market. US crude production was expected to rise 1.43 million bpd in 2019 to average 12.49 million bpd, the US Energy Information Administration (EIA) said on Tuesday, up from its previous forecast for a rise of 1.35 million bpd. US crude stockpiles were forecast to have risen 2.3 million barrels last week, the third straight weekly build.
The American Petroleum Institute, an industry group, issues its supply report at 2030 GMT, ahead of Wednesday's official figures. "I think what's really giving the market pause is that nobody can actually come close to predicting what's going to happen in tonight's API report," Phil Flynn, analyst at Price Futures Group in Chicago.
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