Singapore: Oil resumed its fall towards $60 on Friday and looks set to end the week down about 8%, its largest weekly fall since late January, on deepening economic pessimism and fears of new rules to curb futures speculation.
Uncertainty on earnings and economic recovery prospects kept Japanese shares hobbled near seven-week lows on Friday, and further pressured oil prices that briefly dipped below $60 on Thursday.
Crude’s small gain on Thursday put an end to six consecutive sessions of lower settlements, the longest losing streak since mid-December. Losses were initially triggered by dire US unemployment data the previous Thursday and kept on the boil by a steady stream of poor economic news.
US light crude for August delivery fell 40 cents a barrel to $60.01 by 0637 GMT, having settled up a modest 27 cents at $60.41 on Thursday.
London Brent crude lost 34 cents to $60.76.
“Yesterday’s market put a stop to the big drop in prices since last week. But there isn’t any big move this morning. Everyone has lost their way. Where is the current price?” said Ryuichi Sato, analyst at Tokyo-based Mizuho Corporate Bank.
“$50 is the bottom level but $70 is difficult to break through due to the inventory stockpiles,” he added.
Oil prices surged from lows below $34 hit in February to more than double that level in the second quarter on optimism that the global economy could be on the path to recovery.
But prices have fallen 18% since the beginning of July from a year-high of $73.38 hit on 30 June.
“With crude oil and petroleum product inventories at very high levels, we think any near-term upside to oil prices will be limited and we even see a temporary dip below $60/bbl,” Bank of America Securities-Merrill Lynch said in a weekly research report.
Prices have also come under presure this week after the top regulator of US futures markets - the Commodity Futures Trading Commission - said it was considering a clampdown on excessive speculation in energy and commodity trading.
“A strong incentive was created for market participants of all types to draw back from the market, particularly from the long side of US markets,” Barclays Capital said in its weekly oil review.
Oil watchdog International Energy Agency (IEA) is due to release its monthly oil report by 1:30pm, which will be closely watched, after its said last month that it expected global oil demand to fall by 2.47 million barrels per day (bpd), less than the 2.56 million bpd of its previous report.
Oil rose on Thursday after the Labor Department reported the number of Americans filing new claims for jobless benefits fell last week, and talk of refinery shutdowns amid poor refining margins that helped send gasoline futures up nearly 2% on worries of tightening supplies.
Valero Energy Corp said on Thursday its 275,000-barrel-per-day refinery in Aruba has begun a planned two- to three-month shutdown, mainly due to economic reasons.