SINGAPORE (Reuters) - U.S. oil prices were little changed at $35 a barrel on Wednesday after falling nearly 7 percent a day earlier on fresh concerns over the economy and sliding oil demand, which has caused inventories to bloat.
Global markets were roiled by fear that Eastern Europe’s battered economies would drag down Western banks, while oil traders braced for an eighth consecutive rise in weekly U.S. crude oil stock data.
U.S. crude for March delivery, which expires on Friday, gained 8 cents to $35.01 a barrel at 0208 GMT (2:08 a.m. British time), while London Brent crude for April delivery fell 34 cents to $40.69 a barrel.
With the expiry of the March contract just days away, the April contract has fallen even faster than the front-month, narrowing the gap to around $3.50 on Wednesday versus nearly $8 last week, suggesting traders believe the swollen stocks in Cushing, Oklahoma, may persist.
“The pessimistic macro tone that has been evident in equity markets has been reflected in the energies complex,” said Toby Hassall, chief analyst at Commodity Warrants Australia.
U.S. stocks slid within striking distance of the November bear-market low on Tuesday, with financial shares sinking to 14-year lows after Moody’s Investors Service said banks could be hit by the recession in Eastern Europe. .N
In Asia on Wednesday, Japan's Nikkei stock average .N225 fell at one point to a three-month intraday low. .T
The financial crisis has left much of the world in recession and hammered oil consumption, pulling crude prices from record highs above $147 a barrel hit in July.
“An imminent recovery in crude oil prices appears unlikely as weak global demand remains a weight on the market,” Hassall said.
U.S. crude oil inventories likely rose for the eighth straight time last week to near an 11-year high, a Reuters poll of analysts showed, with crude stocks seen rising by 2.6 million barrels while gasoline and distillate stocks fell.
The forecasts were issued ahead of data to be released by the American Petroleum Institute later on Wednesday and by the U.S. Energy Information Administration on Thursday. Both reports were delayed a day by the U.S. Presidents’ Day holiday this week.
Traders will also watch for data later in the day on U.S. housing starts as well as industrial production for January, and the Redbook retail sales index for February, for fresh indications on the state of health of the world’s top economy.
Reporting by Chua Baizhen, Editing by Jonathan Leff