Singapore: Oil edged up above $41 a barrel on Wednesday as the March US futures contract took over as front month, but fears about a deep recession and weak demand continued to keep prices in check.
Asian stock markets opened lower, with Japan’s Nikkei down around 2% after global stocks and bond prices fell in the previous session with benchmark S&P 500 and Nasdaq market both losing more than 5%.
US light crude for March delivery rose 26 cents to $41.10 a barrel after falling $1.73 on Monday.
The February contract, which expired on Tuesday, settled up $2.23, or about 6% at $38.74 a barrel on short-covering.
London Brent crude settled down 88 cents at $43.62 and was trading up 18 cent at $43.80.
“ Weakness in oil consumption continues to weigh on the oil price,” the Commonwealth Bank of Australia said in its daily commodity report.
The International Energy Agency, a leading energy watchdog, last week joined the ranks of forecasters predicting a fall in global oil demand this year and cut its estimate for 2009 demand by 940,000 barrels per day to 85.3 million bpd, a fall of about 500,000 year-on-year.
Oil has plunged from record highs above $147 a barrel in July as a global economic slowdown has slashed oil consumption, prompting the Organization of Petroleum Exporting Countries (Opec) to agree to a series of output cuts aimed at balancing the market and supporting prices.
Opec is fully enforcing its deepest ever oil supply curbs, whichh should be enough to boost prices, the group’s president, Angolan oil minister Botelho de Vasconcelos, told Reuters on Tuesday.
But demand has yet to respond to the cuts.
China, one engine in the six-year commodity price rally that started in 2002, was expected to release fourth-quarter GDP data this week that economists say will show 7.0% growth, the slowest pace of expansion in nearly a decade for the world’s third-biggest economy.
A Reuters poll of analysts forecast that crude oil stocks in the United States, the world’s biggest consumer, rose by 1.4 million barrels last week, with distillate stocks seen down 1.4 million barrels due to cold winter weather.
Gasoline stocks would be up 2.1 million barrels, up 5.1 million barrels from a year ago.