Perth: Oil reversed course and rose above $61 a barrel on Monday, buoyed by a weakening U.S. dollar, but gains were curbed as an increasingly gloomy economic outlook continued to weigh on near-term energy demand.
Comments by Opec member Libya that the oil-producing cartel was not considering cutting production again also kept the commodity at a 1-“ year low.
U.S. light crude for December delivery rose 28 cents to $61.05 a barrel by 0337 GMT, having earlier fallen to $59.97, its lowest since 22 March 2007. London Brent Crude gained 42 cents to $57.85.
“The pullback in the U.S. dollar is a key driver for oil’s gains,” said Toby Hassall, chief analyst at Commodities Warrants Australia in Sydney.
“But a weak global demand outlook will continue to be the primary driver in oil market. With the U.S. non-farm payroll expected to be abysmal, there is nothing much on the demand side that can lift prices.”
The dollar extended losses against the yen on Friday, falling more than 1 yen from the day’s highs on risk aversion.
Oil prices have tumbled more than 9% this week as a raft of dismal economic data from the United States heightened worries about a protracted global recession and growing U.S. fuel stockpiles underscored slackening energy demand.
The International Monetary Fund said on Thursday it expected 2009 global economic growth of 2.2%, down 0.8% points from its October forecast. It also cut its 2009 baseline oil price projection to $68 a barrel from $100.
Asian stocks fell on Friday on fears of a global recession, as layoffs and corporate profit warnings piled up in the face of a rapidly slowing global economy.
Traders will be looking towards U.S. economic indicators due later on Friday, including government reports on October unemployment data and September wholesale inventories, to gauge how the world’s largest economy is faring.
Opec not mulling cuts
Opec is not actively considering cutting production again as oil markets are still volatile, but the cartel could opt to meet before its next scheduled meeting in December, Libya’s top oil official said on Friday.
Shokri Ghanem also warned that continued low oil prices could force companies to cancel new projects, risking a shortage of oil in two years.
In about three months, oil prices have plummeted nearly $90 from record highs above $147 a barrel, as the growing global economic crisis erodes energy demand in the United States, the world’s largest energy consumer, and other industrialised nations.
Slowing demand and the sharp price declines drove producer cartel the Organization of the Petroleum Exporting Countries to agree to cut output by 1.5 million barrels per day (bpd) at an emergency meeting last month.
Opec’s seaborne oil exports, excluding Angola and Ecuador, will drop 310,000 bpd in the four weeks to 22 November and will have fallen 700,000 bpd from an August supply peak, an oil analyst who tracks future flows said.