By early afternoon in Europe, benchmark West Texas Intermediate crude for November delivery was down 24 cents to US$103.25 a barrel in electronic trading on the New York Mercantile Exchange. The contract had risen 46 cents to settle at US$103.49 on the Nymex on Tuesday.
On Tuesday, the Washington-based International Monetary Fund said it was cutting its global economic growth forecasts for 2013-14, primarily due to slowing growth in China, India, Brazil and other developing countries.
Michael Hewson, an analyst at CMC Markets, said in an email commentary that oil prices "remain capped somewhat by concerns that a slowdown in emerging markets could well weigh on demand."
The IMF also warned that the U.S. would harm the world economy if it fails to raise its borrowing limit. If Congress doesn't raise the limit on the amount of money the country can borrow by Oct. 17, the U.S. could face an unprecedented default on its debts.
Oil prices have bounced around between US$101 and US$104 a barrel after the U.S. government was forced to partially halt operations last week. The shutdown occurred when Congress failed to agree on short-term funding past the end of the fiscal year on Sept. 30.
"Markets have been struggling for direction in recent sessions as the U.S. government shutdown pushes investors to the sidelines," said a report from Sucden Financial Research in London.
Ample oil supplies and the impact of a strengthening dollar were also keeping oil prices down.
The industry-funded American Petroleum Institute said late Tuesday that U.S. crude stocks expanded by 2.8 million barrels last week, while analysts polled by Platts, the energy information arm of McGraw-Hill Cos., had been expecting a build of 2.2 million barrels.
The report from the Energy Department's Energy Information Administration — the market benchmark — will be out later Wednesday.
As well, the U.S. dollar has recovered somewhat after recent losses. A stronger dollar makes commodities like crude oil priced in dollars more expensive and a less enticing investment for traders dealing in other currencies.
Brent, the benchmark for international crudes, was down 35 cents to US$109.81 on the ICE Futures exchange in London.
In other energy futures trading on Nymex, wholesale gasoline rose 0.56 of a cent to US$2.6362 a U.S. gallon (3.79 litres), heating oil fell 0.47 of a cent to US$3.0278 a gallon and natural gas lost 0.5 of a cent to $3.711 per 1,000 cubic feet.
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