Oil lower at $47 after 10% jump overnight

Oil lower at $47 after 10% jump overnight

Singapore: Oil fell to around $47 a barrel on Friday on a recovering US dollar, after a near 10% jump overnight as Opec’s president called for more “severe" supply cuts at next week’s meeting.

The dollar pulled back from seven-week lows against the euro, although further pressure on the greenback could come from a slew of US economic data due later.

By 7:40am (IST), crude for January delivery was down 91 cents at $47.07 a barrel, off a session low of $46.72 earlier. It had settled up $4.46, or 10.3%, on Thursday in the biggest single-day percentage gain since Nov. 4.

Crude has rebounded nearly 15% this week, on track for its biggest weekly gain since 16 January, 2000, after having shed two-thirds of its value over the last five months.

London Brent crude was down 92 cents at $46.47.

Oil prices have lost about $100 from a record peak of $147.27 scaled last summer as the global financial crisis crimps consumer demand for fuel.

The dollar rose against the euro on Friday after hitting a seven-week low the previous day, but the US currency is likely to face downward pressure on a likely interest rate cut next week by the Federal Reserve.

Data due later in the day, including November producer price inflation and retail sales, as well as a preliminary reading on December consumer confidence, could make grim reading for the world’s largest oil consumer.

Oil’s strong gains the previous day came after Opec president Chakib Khelil said in remarks published that Opec should agree on a more “severe" reduction in output at the 17 December meeting in Algeria.

Traders are closely watching Opec for any more signals on what some analysts perceive could be a further 1-2 million barrels per day output cut due at the group’s meeting next week.

Support also came after Russia’s President Dmitry Medvedev said the country was ready to work with Opec on possible oil output.

A prediction from the International Energy Agency that world oil demand growth would rebound in 2009 after shrinking this year for the first time since 1983 also helped the market.

The IEA’s view that demand will grow in 2009 contrasts with that of the US government’s Energy Information Administration, which this week forecast consumption would fall by 450,000 barrels per day (bpd) next year.