Oil prices fell about 2 percent on Tuesday on forecasts for rising U.S. crude output and a gloomier outlook for global demand growth in a report from the International Energy Agency.
Analysts also noted that oil prices were being pressured by a global commodities selloff, led by base metals like nickel and copper, due to weaker-than-expected economic data from China.
U.S. West Texas Intermediate (WTI) crude ended Tuesday’s session down $1.06, or 1.9 percent, to $55.70, posting its worst daily performance since Oct. 6. The contract plunged to $55.18 at the session low.
Brent crude futures fell $1.04, or 1.7 percent, to $62.12 per barrel by 2:26 p.m. ET (1826 GMT), after falling as low as $61.36 earlier in the session.
U.S. crude intraday performance
Market watchers said the declines caused some short-term traders to get nervous and sell out of their positions. Traders noted that Brent slid more after the contract fell below its 14-day moving average for the first time in three weeks.
Just last week, prices for both benchmarks hit their highest levels since 2015.
The IEA delivered a surprisingly downbeat outlook for oil demand in its monthly market report, showing an expected slowdown in consumption that was at odds with a more bullish view from the producer group OPEC on Monday.
The Paris-based IEA cut its oil demand growth forecast by 100,000 barrels per day (bpd) for this year and next, to an estimated 1.5 million bpd in 2017 and 1.3 million bpd in 2018.
The IEA said warmer temperatures could reduce consumption, while sharply rising output from some producer countries might bring back the global crude glut in the first half of 2018.
“The IEA slashing its oil demand growth forecast for this year and the next has dampened some of the bullish sentiment prevailing in the market,” Abhishek Kumar, Senior Energy Analyst at Interfax Energys Global Gas Analytics in London.
IEA’s report conflicted with OPEC’s forecast issued on Monday. OPEC raised it demand outlook by 130,000 bpd from its previous estimate. It now expects oil demand to rise by 1.51 million bpd next year.