Crude oil prices head lower

LONDON
Petroleumworld.com, Feb 04, 2010

World oil prices fell on Thursday, extending the previous day's losses, as weak equities markets and rising US crude inventories sparked energy demand concerns, analysts said.

New York's main futures contract, light sweet crude for delivery in March, lost 78 cents to 76.20 dollars a barrel at about 1100 GMT.

London's Brent North Sea crude for March dropped 80 cents to 75.12 dollars per barrel.

Sentiment was hampered by falling global stock markets, said Ben Westmore, an energy and minerals economist with the National Australia Bank.

"There was a little bit of weakness in the equity markets overnight in the US and today the Asian session markets have been softer," Westmore said.

"There are some concerns about demand recovery as reflected in the equity markets and the big supply overhang especially in the US indicates that the outlook for the crude markets is a bit weak."

Europe's main stock markets fell Thursday, before key interest rate decisions in the region amid stubborn worries about Greece's financial difficulties.

Crude oil prices sank on Wednesday, after big gains earlier this week, as the market reacted to a surprise jump in oil inventories in the United States, the world's biggest energy consumer.

Traders said the market was choppy, with prices rising initially after US figures showed gasoline (petrol) reserves fell 1.3 million barrels in the week ending January 29, compared with expectations for a gain of one million.

Distillates -- including diesel and heating fuel -- fell 900,000 barrels. Analysts had pencilled in an 800,000-barrel decline.

However, crude oil stockpiles meanwhile jumped by 2.3 million barrels. Market expectations had been for no change.

US refiners cut back last week to operate at 77.8 percent of capacity, the lowest rate in at least 20 years, outside the immediate aftermath of a hurricane.

Markets are meanwhile awaiting Friday's release of key jobs figures out of the United States that will indicate the strength of recovery in the world's biggest economy.

Earlier this week, oil prices had soared as the market grew more optimistic about global economic growth and energy demand, analysts said.

Investor sentiment was buoyed as equity markets put in strong performances and manufacturing data from the United States reassured nervous investors.

The market was also pushed higher by news of fresh unrest in Nigeria's key oil-producing region.

"The euphoria arising at the start of the week from manufacturing data seems to have come to a temporary end, having contributed a hefty increase in prices," said PVM Oil Associates analyst Philip Wiper.

"There is a need for something extra to give the market its next fix, and hopes will be high for tomorrow's non-farm payroll data from the US.

"It is expected to show an increase of 8,000 jobs, only the second increase since December 2007."

Story from AFP
AFP 02/04/2010 11:58

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