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Oil markets tread water after World Bank report

Brent forecast to average $58 per barrel for the year.

By Daniel J. Graeber

WASHINGTON, Jan. 14 (UPI) -- Crude oil markets were treading water early in the Wednesday session after the World Bank said global economic growth was lower than expected.

The prices for Brent and West Texas Intermediate were holding steady early in the Wednesday session to trade at $46.64 per barrel and $46.02 per barrel, respectively. Markets have been in a free fall for much of the week, with Brent holding below the $50 mark for three consecutive days, the lowest price in roughly five years.

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Oil prices are at the point where international energy companies and those in the secondary sector are trimming jobs and spending in an effort to cope with weak market conditions. The World Bank in a report Tuesday said overall economic growth last year was lower than expected.

Behind the numbers, the bank said soft commodity prices were to blame for the downward momentum.

"The sharp decline in oil prices since mid-2014 will support global activity and help offset some of the headwinds to growth in oil-importing developing economies," the bank's report said. "However, it will dampen growth prospects for oil-exporting countries, with significant regional repercussions."

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The low price of oil is acting as a source of economic stimulus for consumers. Data released Wednesday by the U.S. Commerce Department consumers were reluctant to spend even though gasoline prices are down and employment figures are up.

Retail sales in December were down 0.9 percent, the largest drop since January 2014, the Commerce Department said.

Markets are still searching for a floor price for crude oil, with several investment banks cutting their forecasts for Brent and WTI.

The U.S. Energy Information Administration in its short-term market report said it expected Brent to recover to $58 per barrel in 2015 and move toward $75 per barrel by 2016. For WTI, the administration said it predicted a price in the range of $3 to $4 per barrel below Brent.

The Organization of Petroleum Exporting Countries releases its monthly market report Thursday.

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