IMF Reduces Growth For US & China Lowering Implied Demand For Oil

                    On Thursday the International Monetary Fund has lowered its 2014 global economic growth forecast, warning of “negative surprises” from the United States and China and geopolitical risks in Ukraine and the Middle East. The IMF projected global growth of 3.4 per cent for this year, down from its April estimate of 3.7 per cent. In 2013, the world economy grew 3.2 percent. The downgraded 2014 growth outlook reflects “both the legacy of the weak first quarter, particularly in the United States, and a less optimistic outlook for several emerging markets,” the IMF said, in an update of its semiannual World Economic Outlook.

The downgrade weighed on implied demand for energy products. The brief update showed the IMF increasingly concerned by escalating geopolitical tensions. “Geopolitical risks have risen relative to April: risks of an oil price spike are higher due to recent developments in the Middle East while those related to Ukraine are still present,” the report said. Despite the worse-than-expected global growth outlook for 2014, the IMF left its 2015 forecast unchanged at an annual rate of 4.0 per cent, the fastest pace since 2011.

The lower growth rates weigh on commodity demands, but at the same time the increase in geopolitical concerns pushes the price of crude oil on worries over supply and production disruption. WTI slipped $1.05, or 1 percent, to end at $102.07. The volume of all futures traded was 23 percent below the 100-day average for the time of day. Brentdeclined 96 cents, or 0.9 percent, to close at $107.07 a barrel 

West Texas Intermediate crude declined with gasoline as U.S. inventories of the motor fuel expanded for a third week, threatening to depress refining margins. Gasoline stockpiles grew by 3.38 million barrels last week and supplies around New York Harbor, where futures contracts are delivered, were at the highest seasonal level since 2008, Energy Information Administration data showed. Gasoline futures ended at the lowest price in almost six months. Gasoline futures for August delivery dropped 2.33 cents to $2.8368 a gallon on the Nymex, the lowest settlement since Feb. 28. Ultra low sulfur diesel dropped 0.45 cent to $2.8709.

Natural gas gained after the release of the weekly EIA inventory report. Gas climbed to trade at 3.847 adding 8 points this morning. The report showed a net increase of 90 Bcf from the previous week. Stocks were 561 Bcf less than last year at this time and 683 Bcf below the 5-year average of 2,902 Bcf with the total working gas below the 5-year historical range. - fxempire