Oil prices further retreated from their four-year highs on Wednesday as concerns over weaker global economic growth and the potential effect of Hurricane Michael on fuel demand kept traders on edge.
Brent crude was trading 2.2 per cent lower at $83.10 a barrel while West Texas Intermediate dropped 2.3 per cent to $73.23 a barrel.
The moves come after the IMF downgraded its global economic growth forecasts for 2018 and 2019 on Tuesday, raising concerns that demand for oil products may fall as well.
Oil prices have been marching higher in recent weeks, hitting their highest level earlier this month amid expectations for tighter supplies when the US re-imposes sanctions on Iran on November 4.
But Ian Taylor of Vitol, chairman of the world’s largest independent energy trader, appeared to pour cold water on this view on Wednesday. He told the Oil & Money conference he expected prices to eventually fall towards $65 a barrel, arguing he saw no shortage of crude in the market and the early signs of weaker demand.
The comments were similar to those made by the chief executive of French oil major Total, who said a day earlier that there is no shortage of supplies in the oil market.
Traders also have their eyes on Hurricane Michael, an “extremely dangerous” category 4 hurricane that hit the north-west coast of Florida on Wednesday.
While the eye of the storm bypassed the principal concentration of oil and gas production platforms in the Gulf of Mexico, keeping long term disruption to oil production minimal, fuel demand could take a hit as drivers in the region stay off the roads.
The sell-off in oil prices also tracked the broader sell-off in US equities on Wednesday, with all three main stock indices down at least 2 per cent.
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