Oil falls near $50 over demand concerns

Oil fell towards the $50 a barrel level on Tuesday while base metals were mixed as risk appetite weakened amid renewed concerns about the health of the global financial system.

This followed reports that the International Monetary Fund was set to raise its forecast for global toxic debts from $2,200bn to $4,000bn.

In energy markets, ICE May Brent lost 30 cents at $51.94 a barrel while Nymex May West Texas Intermediate lost 68 cents at $50.37 a barrel.

Traders noted that over the weekend, Saudi-Arabia announced that it would lower the official selling prices for its crude grades for the first time in five months.

Analysts at Commerzbank said the shift "implies Saudi-Arabia signalling that a swift recovery in demand is unlikely."

Jeffrey Currie, commodity strategist at Goldman Sachs, said recent price volatility in the oil market was a "tug-of-war" between weak short-term fundamentals and the likelihood of an improvement in the second half of the year.

Mr Currie, who reiterated his $65 a barrel year-end price forecast for oil, said the market should move into a sustained supply deficit later this year, helped by a more stable demand environment and restocking.

Gold rebounded after three days of losses, rising to $877 a troy ounce and moving between a low of $869.85 and a high of $880.05, after ending trading in New York on Monday at $868.80.

Base metals were mixed with copper up 1.5 per cent to $4,344 a tonne while aluminium added 0.3 per cent at $1,464.50 a tonne but tin lost 2.2 per cent at $10,655 a tonne.

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