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Oil dropped after Iraqi crude production surged to a record and the International Monetary Fund cut its global growth outlook.
Crude fell as much as 5.1 percent in New York and 2.2 percent in London. Iraq is pumping 4 million barrels a day and will boost exports, Oil Minister Adel Abdul Mahdi said at a news conference in Baghdad. The IMF made the steepest reduction to its global-growth outlook since January 2012 in its quarterly global outlook yesterday. Projections for the euro area, Japan, China and Latin America were trimmed.
Oil slid more than 50 percent since June as the U.S. pumped at the fastest pace in more than three decades and the Organization of Petroleum Exporting Countries resisted calls to reduce production. Goldman Sachs Group Inc. and Societe Generale SA were among banks to reduce their price forecasts last week.
"We continue to get news of rising supplies and a shaky economy." John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. "The surge in Iraqi production is going to add barrels to an oversupplied market. The IMF report was lousy and further crimps the demand outlook."
WTI for February delivery, which expires today, decreased $2.05, or 4.2 percent, to $46.64 a barrel at 10:46 a.m. on the New York Mercantile Exchange. The more active March contract slipped $2.03 to $47.10. WTI fell to $44.20 on Jan. 13, the lowest level since April 2009. The volume of all futures traded 72 percent above the 100-day average for the time of day.
Brent for March settlement fell 38 cents, or 0.8 percent, to $48.46 a barrel on the London-based ICE Futures Europe exchange, following a 2.7 percent drop yesterday. Volume for all futures traded was 2 percent higher than the 100-day average. The European benchmark crude traded at a $1.36 premium to the March WTI contract.
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