SINGAPORE (Reuters) – Oil was steady under $44 on Friday, after sinking 4 percent overnight on fears that the deepening financial crisis would further crimp energy demand.
Prices were supported by China’s optimism that its domestic economy was recovering and official promises of more swift stimulus action when required.
Markets will be watching for February U.S. non-farm payrolls data due later, which will likely show unemployment surging to a 25-year high in the world’s top oil consumer.
U.S. crude was up 13 cents at $43.74 a barrel by 3:30 a.m. EST, and is down 2 percent this week, while London Brent crude gained 6 cents to $43.70 a barrel.
David Moore, commodity strategist with the Commonwealth Bank of Australia, said the market was likely to tread water ahead of the jobs data.
“A poor result is pretty much factored into market expectations, and we expect a soft bias for oil prices both tonight and the early part of next week,” Moore said.
Economic news on Thursday reinforced the grim picture.
Workers filing new claims for jobless benefits remained consistent with a severe recession, new orders received by U.S. factories fell for a sixth straight month in January and a report showed a record one in eight U.S. mortgages behind on payments or in foreclosure.
Friday’s key non-farm payrolls report is expected to show the economy shed 648,000 jobs in February, while the unemployment rate is expected to rise to a 25-year high of 7.9 percent, according to a Reuters poll of economists.
Asian stocks slid on Friday, after a warning from General Motors’that it may need to file for bankruptcy drove Wall Street shares to 12-year lows, highlighting the severe troubles of major U.S. companies and banks.
Top Chinese officials said on Friday that substantial fiscal and monetary stimulus was breathing life back into the world’s third-biggest economy hit by crumbling exports, suggesting Beijing saw no need to boost the existing investment plan of nearly $600 billion.
Beijing’s quiet confidence stands in contrast to increasingly gloomy predictions for the United States, the euro zone, Japan, Britain and other industrial nations, all mired in the most severe downturns in decades.
Oil prices have traded in a narrow band around $40 since mid-December, pressured by slumping demand from the global economic downturn, but drawing support from expectations OPEC might cut production again when it meets on March 15.
OPEC has agreed to cut production by 4.2 million barrels per day since September, and a Reuters survey found that members had already met at least 81 percent of their output reduction target.
Angola, which holds the presidency of the 12-member group, will not advocate further production cuts when the group meets, but Venezuela, Algeria and Libya have raised the possibility of a further cut, sources said.