Brent crude fell below $100 a barrel for the first time since July on signs economic growth will slow, curbing demand. West Texas Intermediate oil was little changed before a report that may show a U.S. supply gain.
Brent futures touched $98 a barrel as the International Monetary Fund cut its global growth forecast and urged European policy makers to take action to bolster growth. Futures tumbled yesterday after data showed China’s economy expanded at a slower pace than expected last quarter. A government report tomorrow will probably show that U.S. crude supplies gained 1.35 million barrels last week to 390.2 million, the highest level since July 1990, according to a Bloomberg survey.
“Brent fell below $100 because of the economic outlook in Europe and China,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion. “The picture in Europe looks horrible and the Chinese growth rate is slowing, which means oil demand isn’t going to rise as much as we expected.”
Brent oil for June settlement fell 96 cents, or 1%, to $99.67 on the London-based ICE Futures Europe exchange at 2:39 p.m. New York time. The May futures contract expired at $100.39 yesterday. The volume of all futures traded was almost double the 100-day average for the time of day.
WTI crude for May delivery rose 1 cent to settle at $88.72 a barrel on the New York Mercantile Exchange. The volume of all futures traded was 52% above the 100-day average. Prices earlier fell as much as $2.65 to $86.06.
The front-month Brent grade traded at a premium of $10.95 to the May WTI contract.
Oil rebounded from the day’s lows as equities rallied. The Standard & Poor’s 500 Index gained 1.2% and the Dow Jones Industrial Average rose 0.8%.
The global economy will expand 3.3% this year, less than the 3.5% forecast in January, after 3.2% growth in 2012, the Washington-based IMF said today, cutting its 2013 prediction a fourth consecutive time. The IMF sees the euro area shrinking 0.3%, compared with a 0.2% drop estimated in January, with France joining Spain and Italy in contracting.
“As with many times in the past, oil has been used as the tool to express concerns about the macro economy,” said Amrita Sen, chief oil market analyst at Energy Aspects Ltd., a research company in London.