Oil below $55 on deep recession fears

Oil below $55 on deep recession fears

Singapore: Oil prices were steady below $55 a barrel on Wednesday in Asia as investors paused to examine the extent of global economic weakness, which has sent crude down more than 60% in four months.

Light, sweet crude for December delivery was up 19 cents to $54.58 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract Tuesday fell 56 cents to settle at $54.39, the lowest since January 2007.

Stock markets have served for the past few months as a barometer of investor perceptions about the health of the global economy. The Dow Jones industrial average rose 1.8% on Tuesday as Hewlett-Packard Co. said fourth quarter and 2009 results will exceed analyst expectations.

Most Asian stocks, however, fell on Wednesday. Japan’s benchmark Nikkei index fell 1.8%, Hong Kong’s Hang Seng index dropped 0.3% and the Korea Composite Stock Price Index slid 3.2%.

Oil investors have already priced in a recession in developed countries and only evidence of an especially severe or prolonged slowdown may push prices down further, Chu said.

Prices have fallen 63% since reaching a record $147.27 a barrel in mid-July.

Investors will be watching for signs of slowing US demand in the weekly oil inventories report to be released Wednesday by the US Energy Department’s Energy Information Administration.

The report is expected to show that oil stocks rose 1.2 million barrels last week, according to the average of estimates in a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.

The Platts survey also projects that gasoline inventories rose 700,000 million barrels and distillates increased 900,000 barrels last week.

In other Nymex trading, gasoline futures rose 0.24 cent to $1.14 a gallon. Heating oil gained 1.21 cents to $1.77 a gallon while natural gas for December delivery increased 0.3 cent to $6.52 per 1,000 cubic feet.

In London, December Brent crude rose 16 cents to $52.00 on the ICE Futures exchange.