“Looking ahead, given the weak global activity and heightened downside risks to the near-term outlook, commodity exporters may be in for a downturn,” the Washington-based IMF said in its bi-annual World Economic Outlook.

 

The IMF’s warning came as energy prices fell significantly. Brent crude oil prices dropped to a seven-week low of $120.03 a barrel and US natural gas dropped to a fresh 10-year low of $2.054 per million British thermal units.

 

The fall in energy prices did not discourage the oil bulls, however. Goldman Sachs, Wall Street’s largest commodities dealer, told investors on Tuesday to continue to expect much higher oil prices later in the year.

 

“We recommend a long position in the Nymex WTI September 2012 contract, as we expect that the overall oil market will continue to tighten in 2012, pushing oil prices substantially higher to restrain demand,” David Greely, head of oil research at Goldman Sachs in New York, said in a note.

 

Colin Fenton, head of commodities research at JPMorgan in New York, added that seasonal factors were at play. “Refinery maintenance season reduces crude runs by millions of barrels per day, curbing price appreciation,” he said. This “normal correction” could trim oil prices by 10 per cent or more but was likely to be shortlived.

 

In late afternoon trading in London, ICE May Brent fell $2.21 to $120.47 a barrel while Nymex May West Texas Intermediate dropped $1.40 to $101.07 a barrel. The price spread between the two leading benchmarks narrowed slightly.

 

Copper prices tumbled roughly 4 per cent to $8,050 a tonne, the lowest since mid-January. The sell-off in base metals at the London Metal Exchange concentrated around copper due to worries about the Chinese economy, analysts said. China consumes roughly 40 per cent of the world’s copper output. The price has fallen nearly 8 per cent over the past week.