Oil prices fall as World Bank cuts economic growth outlook

Crude oil futures fell on Thursday as the World Bank cut its global economic growth forecast, ending a two-day rally triggered by a sharp US inventory drawdown.

In its twice-yearly Global Economic Prospects report, the World Bank predicted the global economy would expand 2.8 per cent this year, below its 3 per cent outlook in January.

The World Bank predicted that India would record the biggest growth of major economies for the first time, ahead of slowing China.

Front-month Brent crude oil prices were down 11 cents to close at $65.59 a barrel while the US crude shed 25 cents to trade at $61.18 a barrel.

“Considering China’s economic slowdown, we lean towards lower prices today (Thursday),” said Daniel Ang, an analyst at Singapore-based Phillip Futures.

In South Korea, the world’s fifth importer of crude oil, the central bank cut its policy rate by 25 basis points to a record-low 1.50 per cent.

The aim was to shield a tottering economy from an outbreak of a deadly respiratory disease.

Despite Asia’s slowing economies, Iraq on Thursday increased its July official selling price for Basra Light crude following strong demand for the grade last month.

Crude prices, however, drew support from a big US stocks drawdown that has boosted the outlook for summer fuel demand.

The US Energy Information Administration reported that crude oil stocks shrank by 6.8 million barrels last week, the largest drop in almost a year.

Prices in North America have been buoyed recently by high gasoline demand for road vehicles as well as low production in Canada as a result of wildfires.

“In Western Canada, crude oil inventories are at their lowest level since October as maintenance shutdowns and wildfires in northern Alberta take their toll on supply,” ANZ bank said.