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Oil extends decline towards $72, worries over demand

Oil extends decline towards $72, worries over demand
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First Published: Mon, Feb 01 2010. 10 36 AM IST
Updated: Mon, Feb 01 2010. 10 36 AM IST
Perth: Oil prices fell on Monday, extending January’s worst loss in 13 months on concerns about global growth and sluggish oil demand.
Oil prices ended January down more than 8%, pressured by data showing tepid energy in the United States, worries about fiscal turmoil in smaller euro zone countries and a stronger US dollar.
US crude for March delivery fell 36 cents to $72.53 a barrel by 0239 GMT. The contract fell 75 cents to settle at $72.89 a barrel on Friday, after sliding to a five-week low of $72.43.
London Brent crude fell 33 cents to $71.13.
“The cold weather premium is coming off and investors have to consider the pace of global economic recovery, actual oil demand and a strengthening US dollar,” said Benson Wang, an oil trader at Commodity Broking Services in Sydney.
“Looking at how crude oil prices have collapsed in the last 1-2 hours of trading in the past few sessions, I think it shows a trend whereby investors are trying to get out of their long positions.”
Money managers cut their net long crude oil futures position on the New York Mercantile Exchange in the week through 26 January, the Commodity Futures Trading Commission said on Friday.
Official data that showed China’s Purchasing Managers’ Index falling to 55.8 in January from 56.6 in December, the first month-on-month deterioration since May 2009, also weighed on sentiment.
Analysts said there is a persistent worry that China would further tighten monetary policy.
Beijing’s moves last month to rein in rapid growth and curb inflationary pressures have sparked fears that such measures could impede a still-weak global economic recovery and curb Chinese demand for energy and commodities.
Adding to the gloom, the White House will predict a $1.6 trillion US budget deficit in the 2010 fiscal year, a fresh record and the biggest since World War Two as a share of the economy, a congressional source told Reuters on Sunday.
The grim forecast adds to the challenges facing President Barack Obama, who is emphasizing a message of fiscal discipline but is also seeking stimulus measures to boost the struggling economy in the near term.
Markets are bracing for a big week of economic news, with a number of major central bank meetings across the world and a raft of economic reports out of the United States, culminating in non-farm payrolls data on Friday.
Asian stocks slid on Monday after suffering their worst monthly drop in a year, while the US dollar gathered steam, as fiscal worries in the euro zone prompted investors to add to short positions in the single currency.
Royal Dutch Shell has shut down three oil flow stations in Nigeria’s Niger Delta after a key crude oil pipeline was sabotaged, a company spokeswoman said on Sunday.
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First Published: Mon, Feb 01 2010. 10 36 AM IST