LONDON: Brent crude oil dipped below $91 a barrel on Wednesday to its lowest since June 2012 as lower economic growth forecasts raised new concerns about global oil demand at a time of abundant supply.
The International Monetary Fund on Tuesday cut its global economic growth forecasts for the third time this year, warning of weaker growth in core euro zone countries, Japan and major emerging markets, such as Brazil. Global stock markets fell heavily on the news with the US Dow Jones index down 1.6 percent.
The US Energy Information Administration cut its global demand forecast for 2014 by 1.24 million barrels on Tuesday, and trimmed its Brent crude price forecast for 2015.
"This is a continuation of the downward trend with yet more signs of weaker demand," said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt.
Brent crude for November was down 95 cents at $91.16 by 0830 GMT, after hitting $90.76 earlier in the session, its lowest point since June 2012.
US crude fell $1.05 to $87.80 a barrel. US crude stocks climbed by 5.1 million barrels to 360 million in the week to Oct. 3, according to an inventory report on Tuesday from industry group the American Petroleum Institute (API).
This was much larger than the build of 1.5 million barrels expected by analysts polled by Reuters. Investors awaited official inventory data from the EIA, due to be released at 1430 GMT.
Many analysts now expect a sustained fall below $90, and some believe that it will drop even lower.
"The downtrend is now turning very nasty and looks like it has farther to go," said Robin Bieber, director at PVM Oil Associates.
"A drop below $90 is possible for Brent," Commerzbank's Fritsch said. "At that point, we could see stop-loss orders triggered and some follow-up selling." Iran and major powers are set to hold talks in coming days in Vienna, Iran's foreign ministry said on Wednesday, in a sign that negotiations on the country's nuclear programme are keeping momentum.
European Union sanctions on the National Iranian Tanker Company were annulled, the shipping company said on Tuesday, potentially opening the door to more Iranian supply. Strong supply from Iraq and Libya helped to drive prices down from a high above $115 in June, but a shock remains possible in either country.
Momentum has been building for greater international action against Islamic State militants in Syria and Iraq, as the radical group came close to taking a town on Syria's border with Turkey on Tuesday.
Libyan oil production slipped below 900,000 barrels a day last month due to a sit-in protest at Sirte Oil Co by local residents demanding jobs, a source at the National Oil Corporation said on Tuesday.
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