Singapore: Oil fell to below $90 a barrel on 28 January, as weaker global stock markets spurred profit taking, although expectations that Opec will resist pressure to raise output this week limited deeper losses.
US light, sweet crude for March delivery slid 84 cents to $89.87 a barrel by 0438 GMT. Prices gained 14 cents last week after clawing back from a six-week low of $86.11 a barrel.
Brent crude in London traded down 76 cents at $90.14 a barrel.
“Traders are squaring their positions before the OPEC meeting, hence there is some profit-taking,” said Tetsu Emori of Japan’s Astmax Futures Co Ltd.
After falling sharply early last week, as growing despair over the US economy toppled global equity markets, oil bounced back from Thursday as US legislators and the White House hammered out a $150 billion stimulus plan.
But with prices lately moving in sync with stock markets, traders began to fear that Friday’s $1.30 surge might have been overdone after Wall Street ended the week on a down note following two days of sharp gains.
Worries over the health of the US economy also hit shares in Asia on Monday, ith Japan down over 3% and Hong Kong down more than 4%.
While many analysts say the risk of an economic slowdown could still take some steam out of oil prices that are not far off their record high of $100.09, a thirst for alternative investments and Opec’s resolve has limited the downside so far.
“Geopolitical risks, generally tight fundamental market conditions, and investor preferences for commodity assets are likely to continue to expose the markets to upside risk,” Deutsche Bank analyst Adam Sieminski said in a report.
Attention this week will shift to Vienna, where Opec ministers will meet on 1 February to discussion production rates.
Many officials have said they do not see the need to pump extra oil, despite the growing threat of recession and seasonally weak second-quarter demand, as crude inventories are comfortable.