Oil close to two-month low amid gloomy economic data

Brent has declined by $3 since the beginning of the week

FILE PHOTO: The sun sets behind an oil pump outside Saint-Fiacre, near Paris, France September 17, 2019. REUTERS/Christian Hartmann/File Photo

Oil continued its slide on Thursday, coming close to a two-month low as fears of a recessionary global economy flagged sentiment.

Brent was performing at $57.56 per barrel at 3.19pm UAE time, as the benchmark ignored geopolitical risk and plunged steadily since the start of the week.

West Texas Intermediate, the benchmark tracking largely North American crude grades, was also down trading at $52.52.

Oil's decline comes amid gloomy economic data, with the International Monetary Fund, global manufacturing indexes as well as a significantly higher inventory build-up in the US all exerting downward pressures on sentiment.

The IMF on Wednesday said it expected a further slowdown in global economic growth.

“We see the global economy going through a gradual, synchronised slowdown," said David Lipton, the fund's first deputy managing director.

“Unless the trade tensions are defused, it’s very hard to see mainstream macroeconomic tools countering the impact of escalating trade difficulties, so it’s very important that those be de-escalated."

The IMF cut its outlook for 2019 to 3.2 per cent in July, its fourth revision since last October, which it said was largely down to trade uncertainty.

Mr Lipton said he expected a further slide in growth expectations.

Data for global manufacturing has also been downbeat, sinking for the fifth straight month in September, according to the JP Morgan Global Manufacturing Index. The index's gauge for employment and new orders contracted for the fifth consecutive month as slowing economic growth weighed on manufacturing growth.

US manufacturing also contracted, posting some of the weakest figures since the end of the last recession as global trade tensions between two of the largest economies —  the US and China — depressed the sector.

The factory index by the Institute for Supply Management also fell to its lowest since 2009, according to data released midweek.

Meanwhile, higher than expected build-up in US inventory was a contributing factor to the continued slide in oil prices.

JBC Energy noted in a report that US crude production had "cemented itself well above the 13 million barrels per day mark" in the last two weekly data sets.

"Global equities are also in the red with the latest string of worrying economic data this week offering no reasons for a boost in investor confidence," the report added.