Oil prices fell for a third day in a row on Tuesday on forecasts for rising U.S. crude output and a gloomier outlook for global demand growth in a report from the International Energy Agency (IEA).
In addition, analysts said oil prices were pressured by a global commodities selloff, led by base metals like nickel and copper, due to weaker-than-expected economic data from China.
Brent futures fell 95 cents, or 1.5 percent, to settle at $62.21 a barrel, while U.S. West Texas Intermediate (WTI) crude lost $1.06, or 1.9 percent, to end at $55.70, the lowest close for both contracts since Nov. 3.
Market watchers said declines in recent days caused hedge funds and some other traders to get nervous and sell out of their positions after speculators amassed a record bullish position in the petroleum complex.
Just last week, prices for both crude benchmarks hit their highest levels since 2015.
Ahead of data from the American Petroleum Institute (API), an industry trade group, analysts in a Reuters poll forecast U.S. crude stocks declined by 2.2 million barrels last week. API will release its report at 4:30 p.m. EST (2130 GMT) on Tuesday.
The IEA, meanwhile, delivered a surprisingly downbeat outlook for oil demand in its monthly market report, showing an expected slowdown in consumption that was at odds with a more bullish view from the producer group OPEC on Monday.
The Paris-based IEA cut its oil demand growth forecast by 100,000 barrels per day (bpd) for this year and next, to an estimated 1.5 million bpd in 2017 and 1.3 million bpd in 2018.
The IEA said warmer temperatures could reduce consumption, while sharply rising output from some producer countries might bring back the global crude glut in the first half of 2018.
"The IEA slashing its oil demand growth forecast for this year and the next has dampened some of the bullish sentiment prevailing in the market," Abhishek Kumar, Senior Energy Analyst at Interfax Energy’s Global Gas Analytics in London.
This sentiment comes in part on the back of rising U.S. oil output , which has grown by more than 14 percent since mid-2016 to a record 9.62 million bpd.
The U.S. government said on Monday U.S. shale production in December would rise for a 12th consecutive month, increasing by 80,000 bpd.
"The recent price support, namely the tension in the Middle East, has been swept aside as rising rig counts and U.S. shale output (are) in the focus of traders," PVM Oil Associates analyst Tamas Varga said.
Despite the cautious sentiment, traders said oil prices were unlikely to fall far, largely due to supply restrictions led by the Organization of the Petroleum Exporting Countries and Russia, which have helped reduce excess stockpiles.
© 2023 Thomson/Reuters. All rights reserved.