Oil Prices Fluctuate on Mixed Economic Growth Signals – Wall Street Journal

Updated Jan. 20, 2015 6:42 a.m. ET

LONDON—Oil prices fluctuated Tuesday amid mixed signals about global economic growth.

On Tuesday, the International Monetary Fund downgraded its global economic outlook while China reported its slowest growth in a quarter century while better data out of Germany provided some bullish overtones.

March-dated Brent crude fell more than 1% to $ 49.32 a barrel on London's ICE Futures exchange after falling to as low as $ 48.21 earlier in the session. On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded down 2% at $ 47.75 a barrel.

Abundant supply and tepid demand for the commodity have sent shock waves through the markets with crude shedding close to 60% of its value since a peak in June. While the low prices are a boon for consumers and businesses in importing countries, the positive effects are being offset by weaker investment and a stronger dollar, the IMF said.

"The price of oil is a shot in the arm in the short term…But it is just not enough to compensate for weakness in the world economy," IMF chief economist Olivier Blanchard said.

The Fund cut its global growth forecast for 2015 by 0.3 percentage points to 3.5%. It added that for many oil importers outside the U.S., the boost from lower oil prices is muted by local-currency depreciation against the U.S. dollar as dollar-denominated commodities like oil become more expensive.

In Germany, business sentiment rose for the third consecutive month in January, spurred by a weaker euro and low oil prices in the eurozone's biggest economy. The ZEW sentiment indicator gauging business climate and current conditions rose to 48.4 points, the highest reading since February 2014.

Also on Tuesday, China, the world's largest net importer of oil, reported that its economic growth in 2014 slowed to 7.4%, its weakest rate in decades. Growth for the fourth quarter was 7.3%, a bit stronger than expected, while industrial production also overshot consensus forecasts.

"The China figures give a mixed sentiment to the market," Phillip Futures said in a report. "The figures display a weak current situation due to weaker GDP figures. However, with a higher industrial production, this suggests that the longer-term remains positive."

The short-term picture for oil, however, remains bearish as the 93 million barrels a day global market continues to be oversupplied by at least 1.5 million barrels a day, analysts say.

"The reason for the pullback has largely been because the economic conditions have yet to change," said Jameel Ahmad, chief analyst at FXTM. "There remains a supply surplus and until this is significantly altered, the chances of a recovery in price will be very low."

Nymex reformulated gasoline blendstock for February—the benchmark gasoline contract—fell 0.8% to $ 1.3479 a gallon, while ICE gasoil for February changed hands at $ 476 a metric ton, up $ 2.505 from Monday's settlement.

—Eric Yep, Ian Talley and Monica Houston-Waesch contributed to this article.

Write to Georgi Kantchev at georgi.kantchev@wsj.com