Oil falls 9 percent as economic data stirs demand concerns
NEW YORK |
NEW YORK (Reuters) - Oil fell 9 percent on Tuesday after bleak economic data from top energy consumer the United States stirred demand concerns.
U.S. consumer confidence slipped to a record low in January, a survey showed on Tuesday, as governments around the world offered further help to banks and industries battered by the financial crisis.
U.S. home prices, meanwhile, plunged a record 18.2 percent in November from a year earlier as the housing market remained in the throes of a deep recession, Standard & Poor's data showed on Tuesday.
U.S. crude settled at $41.58 a barrel, down $4.15, or 9 percent, in the biggest percentage loss since January 7. London Brent crude settled down $3.23 at $43.73 a barrel.
The global economic crisis has weakened crude demand, especially in developed economies, and pushed prices off record peaks over $147 a barrel struck in July.
British retailers gave their gloomiest forecast on record for February on Tuesday in the Confederation of British Industry's monthly survey, although data showed January sales were less dismal than expected.
"The economy is still a drag on demand," said Tom Bentz, an analyst at BNP Paribas Commodity Futures Inc.
Governments strung together lifelines to rescue their battered economies on Tuesday, with the $825 billion U.S. economic stimulus bill advanced another step.
Top U.S. refinery Valero (VLO.N) said it is cutting refinery output and capital spending this year due to shrinking demand.
U.S. crude inventories rose by 800,000 barrels last week, according to data released by the American Petroleum Institute on Tuesday afternoon after the market closed, against analysts expectations of a 2.9-million-barrel build.
The API has begun releasing its weekly inventory report on Tuesday afternoons, a day ahead of the U.S. government's Energy Information Administration report.
Rising inventories and slumping prices prompted producer group OPEC to agree to a series of steep output cuts during the second half of 2008.
Kuwait on Tuesday said it would support a further output cut if needed, echoing comments by some of the other members of the cartel.
The Organization of the Petroleum Exporting Countries next meets on March 15 to decide on output policy. Some analysts say current cuts may be insufficient to end the steep drop in prices.
"Unless OPEC production cuts in January were substantially greater than what we have assumed, it is still too early to be calling an end to this current bear market," Goldman Sachs said in a research note.
(Additional reporting by Robert Gibbons, and Gene Ramos in New York, Jane Merriman in London and Jonathan Leff in Singapore; Editing by Christian Wiessner)
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