Brent crude dipped below $100/bbl for the first time since July 2012 as the prospect of fuel demand in the top two consuming nations United States and China looks sluggish and the U.S. crude stockpiles grew over 1.2 million barrels last week.
The decline has been steady since February 2013 when Brent crude was above $118 a barrel.
The International Monetary Fund has also cut its global growth forecast; as the Chinese and European economy grew at a slower rate than was predicted in the first quarter. Chinese gross domestic product is reported to have risen by 7.7%, while it was predicted to rise by more than 8% for the first quarter of 2013.
The executive director of the International Energy Agency, Maria van der Hoeven, announced that “the fall in oil prices indicate that the market is sufficiently supplied, which should help the global economy recovery.”
Although lower oil prices can help a recovery, “the selloff is long overdue and is a reflection of weakness in the market that everyone had been perceiving,” said Edward Morse, global head of commodities research at Citigroup.
