Oil steady above $40 after drop on economic gloom

Oil steady above $40 after drop on economic gloom
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First Published: Tue, Feb 03 2009. 11 46 AM IST
Updated: Tue, Feb 03 2009. 11 46 AM IST
Singapore: Oil held above $40 a barrel on Tuesday, after falling nearly 4% the previous session when US data sparked further concerns over the economy and demand in the world’s top energy consumer.
A US government report on Monday showed consumer spending fell for the sixth straight month in December and the outlook remained bleak, adding to the grim picture painted by earlier data releases in Asia and Europe.
US light crude for March delivery rose 42 cents to $40.50 a barrel by 11:38am, having fallen to $39.83 on Monday, the first time below $40 a barrel in three weeks.
London Brent crude was 71 cents higher at $44.53 a barrel.
A global financial crisis, which started with a downturn in the US housing market, has triggered recessions in all of the big industrialised economies, sharp slowdowns elsewhere and put millions of jobs on the line.
That in turn has cut the demand for oil and swelled fuel stocks, knocking more than $100 a barrel of the price off crude since its July 2008 peak near $150.
“The oil market is near its bottom,” said Anthony Nunan, risk management executive at Tokyo-based Mitsubishi Corp.
The Organization of the Petroleum Exporting Countries (Opec) has cut supplies by more than 4 million barrels per day (bpd) since September in a bid to balance the market and rescue its revenues.
Monday’s losses also came after news that union and oil industry negotiators in the United States averted a strike that would have cut fuel production, and that talks over a new contract were progressing well.
Some 10 percent of US refining capacity would be idled if the oil workers walked off the job.
Eyes were also on the US Senate and its effort to reignite the US economy.
President Barack Obama acknowledged differences but demanded quick action as a Democrat-led US Senate opened debate on a nearly $900 billion economic stimulus package facing broad Republican resistance.
Traders were looking ahead to US crude inventory data, which is likely to show stocks rose for the sixth time in a row as refinery utilisation remained curbed by seasonal maintenance and imports rose, according to a Reuters poll of analysts..
The analysts issued their forecasts ahead of weekly inventory data to be released on Wednesday by the US Energy Information Administration. Industry group American Petroleum Institute will release its data on Tuesday.
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First Published: Tue, Feb 03 2009. 11 46 AM IST
More Topics: Markets | Oil | Crude | US | Strike |