Crude Oil Prices Drop Below $88 Per Barrel Mark

Crude Oil Prices Drop Below $88 Per Barrel MarkAt the end of yesterday’s trading, crude oil prices dropped below the crucial $88 threshold, amid reports of the International Monetary Fund reducing its forecasts for global economic growth.

As of late afternoon Bangkok time Wednesday, oil prices for May delivery had dropped 73 cents to $87.99 per barrel, a day after rising one cent to $88.72 per barrel on Tuesday. Brent crude oil prices also dropped 64 cents to $99.27 a barrel yesterday.

Oil prices were among the many commodity prices that had gone down earlier in the week, with crude prices plummeting close to 3 percent Monday following a broad commodity selloff. This followed news from China’s national statistics bureau forecasting slower economic growth than originally forecasted for the March ending quarter of 2013.

The IMF announced on Tuesday more conservative forecasts for world economic growth, with this figure now expected to be at 3.3 percent, down from January’s 3.5 percent predicted growth. Economic growth in the United States is now forecasted at 1.9 percent for the year, down from the January forecast of 2.1 percent. The IMF added that combined Euro zone economy, which covers 17 countries, could shrink by 0.3 percent this year.

According to Singapore-based Standard & Poor equity research director Lorraine Tan, the “pretty sluggish” recovery of the world’s economy could be a key variable if oil prices go even lower in the coming months. “The drivers for oil prices to go higher aren’t really there,” hypothesized Tan, who also counted increased U.S. energy production as a possible reason for a further drop in oil prices.