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Oil prices fall on economic jitters
NEW YORK
Petroleumworld.com, Mar 24, 2008
World oil prices briefly fell below 100 dollars a barrel Thursday, slipping further from record highs struck earlier this week, amid fears of a global slowdown in energy demand, traders said.
Concerns about US growth were renewed after the OECD reduced its US growth forecasts for the first half of this year and said the American economy was teetering on the brink of recession.
New York's main oil futures contract, light sweet crude for delivery in May, closed down 70 cents at 101.84 dollars per barrel, after earlier sinking as low as 98.65.
The April contract had expired Wednesday after plunging by 4.94 dollars.
In London, Brent North Sea crude for May delivery settled 34 cents lower at 100.38 dollars per barrel after earlier touching a low of 98 dollars.
"Crude fell below 100 dollars a barrel as fears of a US recession, its impact on the rest of the world, and on oil demand growth continue to dominate headlines," Sucden analyst Michael Davies said before prices recovered somewhat.
Economic fears were renewed in the wake of the OECD report.
The Paris-based Organization for Economic Cooperation and Development said the US economy was now expected to grow 0.1 percent in the first quarter, down from the 0.3 percent estimated in December, and would display zero growth in the second, compared with 0.4 percent given previously.
A growing number of US economists believe the economy of the world's biggest oil importer is already in a recession.
OECD analysts believe US growth will falter in part due to the ongoing housing downturn, which they said would likely dampen home prices "for some time to come."Oil prices had scaled historic heights on Monday as the dollar remained weak and as investors sought a safer refuge for their cash than volatile world stock markets.
New York crude hit a record 111.80 dollars on the back of the plunging US dollar, which hit a lifetime low against the euro. The weak US currency encourages demand for dollar-priced commodities as they become cheaper for buyers using stronger currencies.
And crude prices surged by more than three dollars on Tuesday after the US Federal Reserve slashed US interest rates, stoking expectations of strong energy demand in key consumer the United States.
But prices have tumbled in the past 24 hours as traders focused on the global credit squeeze and the impact it might have on economic growth, energy supplies and demand.
The US Energy Information Administration (EIA) said Wednesday that crude stocks rose by 200,000 barrels to 311.8 million barrels in the week ended March 14, about average for this time of the year. Markets were expecting stocks to rise by around 2.3 million barrels.
It also reported unexpectedly large declines in both gasoline and distillate inventories.
" Once again, market headlines are featuring concerns about the impact of the ongoing subprime crisis on the US economy and its impact on US oil demand growth," added Davies.
" These fears were highlighted by weaker demand numbers for distillates and gasoline in the weekly EIA report."
Story from AFP
AFP 20 1917 GMT 03 08
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