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Oil prices fall on US recession fears
NEW YORK
Petroleumworld.com, Jan 14, 2008World oil prices tumbled Friday amid mounting fears the US economy could be tipping into a recession and amid reports of fresh unrest in Nigeria, a key oil-producing nation, traders said.
New York's main oil futures contract, light sweet crude for delivery in February, closed down 1.02 dollars at 92.69 dollars per barrel.
On the London market, Brent North Sea crude for February delivery tumbled by 1.15 dollars to settle at 91.07 dollars per barrel.
Oil prices have plummeted by as much as five dollars this week from record heights amid growing fears that slowing economic growth in the United States -- the world's largest economy and biggest oil consumer -- could dampen crude demand.
"Persistent worries about a potential recession in the US and a slowdown in growth rates put downward pressure on the market," said Sucden analyst Andrey Kryuchenkov.
"Investors fear that a slowdown in the US could spread to the broader market and become a drag on the global economy, consequently denting demand for energy," he said.
Such worries also weighed down Wall Street Friday as stocks fell heavily in afternoon trading.
Earlier Friday, prices had edged higher amid ongoing geopolitical tensions and hopes that the US Federal Reserve will cut interest rates aggressively in a bid to boost economic momentum.Fed chairman Ben Bernanke said Thursday that economic prospects for 2008 have worsened and that the US central bank stood ready to take "substantive additional action" to support growth.
Traders read that as a clear signal that the Fed was poised to cut US borrowing costs, probably by half a percentage point, later this month.
Despite recent heavy price falls, oil traders warned that there could be another run at 100 dollars per barrel due to lingering geopolitical concerns.
Nigeria, Africa's biggest oil producer, faces problems from rebel activity that has caused the country to shut down some oil installations.
A prominent militant group in the oil-rich Niger Delta said Friday it had planted an explosive device that set a tanker on fire in Nigeria's main oil hub, Port Harcourt.
The Movement for the Emancipation of the Niger Delta (MEND) said in a statement that its fighters had detonated "a remote explosive device" that sparked the blaze on the berthed vessel.
The fire was subsequently extinguished although local residents said smoke was still hanging over the tanker.
Prices also fell this week after the US Department of Energy said US gasoline and distillate stocks rose last week by a much larger-than-expected 5.3 and 1.5 million barrels respectively.
The market's focus is now turning to a production meeting of the OPEC oil producers' cartel in Vienna next month.
Ministers from the Organization of the Petroleum Exporting Countries, which accounts for about 40 percent of global crude supplies, will convene in the Austrian capital on February 1.
Story from AFP
AFP 11 2035 GMT 01 08Copyright© 2007 Petroleumworld. All rights reserved.
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