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Oil Falls to Around $53 as Demand Worries Return - ASHARQ AL-AWSAT English Archive
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LONDON (Reuters) – Oil fell below $53 a barrel on Thursday after a very bearish set of U.S. stocks and oil demand data increased worries over falling oil demand.

Oil fundamentals are weak, with U.S. crude stocks rising sharply and oil demand in the United States falling in September to its lowest level for any month in more than a decade.

U.S. light crude for January delivery fell 3.3 percent, or $1.82, to a low of $52.62 a barrel, erasing some of the $3.67 gains made on Wednesday. By 3:43 a.m. EST, the contract had recovered some ground to trade at $53.57, down $0.87.

London Brent crude fell 75 cents to $53.17.

“Demand is slowing and the market is heading lower again,” said Robert Laughlin, oil analyst at MF Global in London.

Oil has fallen by almost $100 a barrel since hitting a record peak above $147 a barrel in July as the global credit crunch dented demand in large consumer nations.

U.S. weekly crude stocks rose by a hefty 7.3 million barrels in the week ended November 21, well above forecasts for an 800,000 barrel increase, the U.S. Energy Information Administration (EIA) said on Wednesday.

Total U.S. product demand over the past four weeks was down 6.6 percent from year-ago levels, while September oil demand fell by 12.8 percent versus a year ago to its lowest point in 12 years, the EIA also said.

Global demand is expected to decline by 20,000 barrels per day (bpd) each in 2008 and 2009, the first drop in a generation, that would leave it at 86.01 million bpd then, a poll of analysts found on Wednesday.

Support may come from an OPEC meeting in Cairo on Saturday.

Venezuelan oil minister Rafael Ramirez said on Wednesday OPEC might agree to cut production at the special informal meeting called to study recent falls in crude prices.

“The surge in crude imports and stocks increases the odds of a decisive OPEC cut,” French bank Societe Generale said in an overnight report.

Venezuela, a price hawk in OPEC, has pushed for OPEC to quickly decide to cut output by at least 1 million bpd.

Laughlin at MF Global said the oil market was likely to react very negatively if OPEC did not act decisively to tighten the gap between oil supply and demand.

“OPEC is going to have to make a very clear move when it meets this weekend or prices will fall a lot further. We are due for another test of $50 a barrel,” he said.

Analysts said a sharp move upwards on Wednesday, when oil jumped more than 7 percent, was largely due to a rally in U.S. equities, which are acting as a barometer of consumer sentiment.

The Dow Jones industrial average has risen 15.6 percent in the last four days, the largest four-day percentage gain since 1932, after Europe proposed a $200 billion stimulus, and China cut interest rates by the biggest margin in 11 years.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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