Oil prices have dropped after the International Monetary Fund (IMF) cut its global economic growth forecasts for this year and next.

Brent crude fell 20 cents to reach $84.80 per barrel, while US light crude decreased 15 cents to trade at $74.81, Reuters reported.

Despite the fall in prices, oil markets were supported as Hurricane Michael forced operators to cut crude production in the Gulf of Mexico by 40%.

City Index senior market analyst Fiona Cincotta was quoted by the news agency as saying: “Oil prices have stabilised for the moment, between a real and a metaphorical storm.

“Hurricane Michael is powering ahead toward the Gulf of Mexico but it now seems likely to miss the main production areas there. On the other hand, Iran sanctions are only weeks away.”

The international finance agency said that that the global economy will grow 3.7% in both 2018 and 2019, down from its forecast of 3.9% in July this year.

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By GlobalData
“Oil prices have stabilised for the moment, between a real and a metaphorical storm.”

IMF noted that trade wars and rising import tariffs are affecting commerce. In addition, emerging markets are reeling under tighter financial conditions and capital outflows.

The IMF’s lowering of its global growth forecasts has raised apprehensions that demand for oil may also fall globally.

However, oil markets are gripped with concerns related to supply due to the significant reduction in production from offshore US Gulf of Mexico wells.

According to the US National Hurricane Center’s latest advisory, Michael grew into an ‘extremely dangerous’ Category 4 hurricane with wind speeds of up to 140mph.

The hurricane is expected to make landfall later today in Florida. In preparation for the hurricane, oil producers evacuated personnel from 75 platforms.

According to data released by offshore regulator the Bureau of Safety and Environmental Enforcement, companies shut daily production of about 670,800 barrels of oil and 726 million cubic feet of natural gas by midday on 9 October.