Oil falls below $45 on US economic data worry

Oil falls below $45 on US economic data worry
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First Published: Fri, Feb 27 2009. 09 08 AM IST
Updated: Fri, Feb 27 2009. 09 08 AM IST
Seoul: Oil fell below $45 a barrel on Friday, after rising more than 6% overnight, as the impact of a two-day gasoline rally started to wear off and investors turned their attention to economic indicators again.
Oil prices fell in sympathy with US stocks, which declined 1.2% on news the United States will rack up a $1.75 trillion budget deficit to overhaul healthcare and shore up the economy this year, the biggest since World War Two, and data showing jobless claims had jumped to a record 5.1 million.
US crude for April delivery was down 61 cents at $44.61 a barrel by 8:55am, after a gain of $2.72 on Thursday.
London Brent crude lost 26 cents to $46.25.
Oil is on course to end the month up 7% from January and up around 15% from a week earlier.
“The boost (in oil prices) was sort of an instant reaction to the weekly inventory data and strong demand for gasoline,” said Mark Pervan, senior commodities analyst at Australia & New Zealand Bank. “I think the market went ahead of itself.”
Opec members continue to mull the possibility of another output cut at its meeting in March, supporting the previous two days’ price gains.
Venezuela said it wanted Opec to agree on a new oil output cut, but relatively small member Ecuador said oil prices were stabilising now, brushing off possibility that it might urge for a cut.
Market players are closely eyeing March heating oil and RBOB gasoline contracts that expire on Friday as well as key economic data, including euro zone January inflation and unemployment figures and US fourth-quarter GDP.
The Commerce Department’s GDP figures, due at 7am, are expected according to a Reuters forecast to show that the world’s largest economy had contracted at a 5.4% annual rate, the deepest slide since the first quarter of 1982.
Reflecting the bleak demand outlook, Japanese industrial output fell a record 10% in January and new jobs proved harder to find, showing Japan’s worst recession since World War Two is deepening.
Dried-up credit markets are having a severe impact on industries around the world. US durable goods orders, an important gauge of business activity, fell for a sixth month to a six-year low in January.
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First Published: Fri, Feb 27 2009. 09 08 AM IST
More Topics: Markets | Oil | Crude | Obama | Opec |