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Oil falls below $39 after US crude stock draw

Oil falls below $39 after US crude stock draw
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First Published: Fri, Feb 20 2009. 09 00 AM IST
Updated: Fri, Feb 20 2009. 09 00 AM IST
Singapore: Oil prices fell below $39 a barrel on Friday as front-month contracts near expiry, paring a 14% gain a day earlier on government data showing an unexpected draw in US crude stocks.
US crude futures for March delivery, which expire later in the day, fell 76 cents to $38.72 a barrel by 7:35am, after posting in the previous session the biggest settlement gain since 31 December.
April delivery contracts fell 81 cents to $39.37, while London Brent for April delivery dropped 55 cents to $41.44 a barrel.
“There’s a bit of profit-taking. Traders were looking for any reason to buy up. If we see another piece of bad economic news prices will come back down again,” said Gerard Rigby, an analyst at Fuel First Consulting in Sydney.
Crude inventories in the world’s top consumer fell slightly last week on lower imports and higher demand, the US Energy Information Administration said, snapping seven-straight weeks of builds against market expectations.
The bullish oil data countered pessimism in the US stock market, where the Dow industrials closed at their lowest in more than six years on a gloomy jobs report and fears that banks could be nationalised.
Crude prices have fallen more than $100 a barrel from the peaks hit last July as the worsening economic crisis bites into oil demand, prompting the Organization of Petroleum Exporting Countries (Opec) to agree to deep output cuts in the second half of 2008 to combat the price slide.
US Energy Secretary Steven Chu on Thursday could not say whether the Obama administration was against another oil output cut by Opec when the producer group meets on 15 March, and that he would have to find out the administration’s position.
US economic reports due out later today include the consumer price index and real earnings for January, as well as the Economic Cycle Research Institute’s (ECRI) weekly index of economic activity.
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First Published: Fri, Feb 20 2009. 09 00 AM IST
More Topics: Markets | Oil | Crude | Dow | Price |