Singapore: Oil fell towards $43 a barrel on Friday, as larger-than-expected US oil stocks builds and bearish economic data offset hopes for a quick US economic stimulus package.
Fresh evidence of the slowing growth that is undermining oil demand also sent Asian stock markets to a 1-month low, weighed by poor corporate results in the technology sector, with Samsung Electronics posting its first ever quarterly loss.
US light crude for March delivery was down 63 cents at $43.04 a barrel by 10:41am, having slid by as much as $1.08 earlier.
London Brent crude edged down 1 cent to $45.38.
“The oil inventory numbers caused some surprise. Wednesday’s rally has been put on hold as traders see the excess supply problem not going away until at least the second half of 2009,” said Jonathan Kornafel, Asia Director of Hudson Capital Energy, a US-based options house.
US weekly data, released on Thursday, showed crude inventories up 6.1 million barrels, well above forecasts for a 1.4 million barrel rise, and leaving them more than 40 million barrels above year-ago levels.
Distillates stocks also increased by a counter-seasonal 800,000 barrels, while gasoline inventories climbed 6.5 million barrels.
Oil prices have lost more than $100 a barrel over the past six months as a financial crisis has turned into a global economic crisis, sending major economies towards recession and cutting oil demand in the process.
The latest US economic data, also released on Thursday, showed new claims or US jobless benefits exceeded analyst expectations while home-building slid to a record low in December.
Prices had rallied from just above $40 to end 12 cents up on Thursday, as hopes that the White House would move quickly on an economic stimulus package outweighed flagging demand and rising inventories in the world’s top consumers.
“The Obama announcement rally yesterday merely reflects the hopes of a possible end to the economic turmoil. But this end will not come about for some time,” Kornafel added.
While demand remains weak, eyes have been on Opec, which has started turning the taps off after agreeing to curb supplies by 4.2 million barrels per day from September levels in the hope of stopping the slide in prices.
Opec seaborne oil exports, excluding Angola and Ecuador, will drop 250,000 barrels per day (bpd) into early February to a five year low, UK consultancy Oil Movements, which tracks future shipments, said on Thursday.
But more is needed to stop the falls.