Investing.com - Oil prices slumped on Tuesday as U.S. traders returned from the Martin Luther King Jr. Day holiday to face a gloomy outlook for the world economy, sparking a flight from risky assets.
New York-traded West Texas Intermediate crude futures tumbled $1.79, or 3.31%, at $52.25 a barrel by 10:43 AM ET (15:43 GMT).
Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., slid $1.88, or 3.00%, to $60.86.
The World Economic Forum (WEF) in Davos, Switzerland, officially kicked off on Tuesday where political and business leaders warned of escalating risks to global growth.
The International Monetary Fund released its updated World Economic Outlook on Monday on the eve of the event and cut its forecasts for global growth.
“After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising,” IMF Managing Director Christine Lagarde told reporters.
The IMF explained that a bigger-than-expected slowdown in China and the euro zone had forced it to cut its outlook for this year and 2020 and warned that a failure to resolve trade tensions could further destabilize a slowing global economy.
The IMF’s downgrade on Monday came just hours after China reported its slowest quarterly economic growth since the financial crisis and its weakest annual expansion since 1990.
“Slowing manufacturing activity in China is likely weighing on demand," said Singapore-based tanker brokerage Eastport.
Adding to worries over the state of the world’s second biggest economy and the largest importer of oil, the National Development and Reform Commission (NDRC), China's top economic planner, warned on Tuesday that economic pressure will hit the job market.
“From the viewpoint of ‘changes’, the external environment is complex and austere,” said Meng Wei, spokeswoman at the NDRC. “Within the changes, there is something to worry about, and there is downward pressure on the economy. To a certain extent, the pressure will be passed onto jobs.”
In other energy trading, gasoline futures sank 3.69% to $1.3992 a gallon by 10:48 AM ET (15:48 GMT), while heating oil lost 2.26% to $1.8727 a gallon.
Lastly, natural gas futures tumbled 9.56% to $3.149 per million British thermal unit.
-- Reuters contributed to this report.