Oil Deepens Slump On Economy, Demand Data; Arbitrage Hits WTI
NEW YORK, Oct 7 (Reuters) - World oil prices resumed a months-long rout on Tuesday to close at their lowest in more than two years, pressured by reduced economic and demand growth forecasts.
U.S. crude oil prices fell faster than European Brent, reversing a weeks-long compression in the Brent/WTI spread amid signs that U.S. refiners are starting to buy cut-priced West African or Mediterranean crudes, re-opening a once common arbitrage. U.S. crude slid further after settlement, when an industry group reported a unexpectedly large rise in inventories.
The International Monetary Fund cut its global economic growth forecasts for the third time this year, warning of weaker growth in core euro zone countries, Japan and Brazil. And German industrial output fell in August at its steepest rate since January 2009.
"The IMF forecast is weighing on (demand) sentiment," said Phil Flynn, an analyst for the Price Futures Group in Chicago.
A lower forecast for global oil demand for 2014 and 2015 from the U.S. Energy Information administration (EIA) on Tuesday added to the bearish outlook.
Brent November crude fell by 68 cents to settle at $92.11 a barrel. Brent fell to a contract low of $91.25 on Monday before recovering in late trading.
U.S. November crude fell by $1.49 to $88.85, then slid further in late trade.
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