Singapore: Oil prices fell on Thursday, after poor earnings at a major US bank raised concerns about the economy and oil demand, underlined by another jump in US crude stocks.
The Dow and wider S&P index fell on Wednesday after Morgan Stanley posted its third loss in six quarters, reviving concerns about the banking sector, while concerns about the wider economy grew after the International Monetary Fund slashed its outlook.
US crude fell 37 cents to $48.48 a barrel by 8:00am, after jumping in late trade on Wednesday.
London Brent crude fell 18 cents to $49.63.
“The come back in prices yesterday in New York time was done very quickly, so the drop in Asian time is just a small correction,” said Ryuichi Sato, an analyst at Tokyo-based Mizuho Corporate Bank.
Crude stockpiles in the world’s top energy consumer jumped to a fresh 19-year high last week, the US Energy Information Administration said.
The rise in crude stocks came despite a 3 percentage point rise in refinery utilisation rates that also led to builds for oil products.
The weak economy has slashed demand and pulled crude back from its record high above $147 hit in July last year, with expectations for growth continuing to be slashed.
The International Monetary Fund forecast the global economy would shrink by 1.3% in 2009, the worst recession since World War 2 and sharply weaker than the 0.5 fall it predicted in January.
Oil prices have risen from the mid-$30s in February to above $54 a barrel in late-March on hopes that worst may be over for the global economy, and compliance by Opec members with output cuts that has seen Opec output drop for seven consecutive months.
Top Libyan oil official Shokri Ghanem said the cartel is worried about oversupply in the oil market and wants members to comply fully with their output targets.
The tug between the output cuts and slumping demand has kept prices bound between $44-$55, a range that analysts said would not be breached immediately.
Mizuho’s Sato said the market had been supported by the 30-day moving average since the beginning of the month, before the almost 9% fall in prices on Monday broke the level and turned it into the next resistance point.
The 30-day moving average stood at $50.00 on Thursday.
“The market is still in a small range. It just has to find direction,” Sato said.