Oil hovers under $49 ahead of US inventory report

[April 22, 2009]  SINGAPORE (AP) -- Oil prices hovered below $49 a barrel Wednesday in Asia as traders worried that a weekly U.S. crude inventories report will show demand remains weak amid a severe recession.

Benchmark crude for June delivery rose 15 cents to $48.69 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange. The contract Tuesday gained 4 cents to settle at $48.55 a barrel.

The May contract, which expired Tuesday, rose 63 cents to settle at $46.51.

Traders will be eyeing the weekly petroleum inventory data that the Energy Information Agency plans to release later Wednesday. Analysts expects crude stocks to jump 3 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Crude stocks already are near 19-year highs.

"We're going to see another build in crude inventories," said Jonathan Kornafel, Asia director for market maker Hudson Capital Energy in Singapore. "The oil price doesn't belong above $50, and the trend is definitely to the downside."

Expectations that massive stimulus packages by governments around the world would spark an economic recovery helped push crude prices above $54 a barrel earlier this month. But some investors are skeptical the worst of the slowdown is over.

"The light at the end of the tunnel is still a freight train bearing down on us," Kornafel said. "I don't see any economic recovery before the end of the year."

"I think the market is going to be between $42 and $47 for the foreseeable future."

Delta Air Lines and United Airlines, AK Steel, DuPont Co. and United Technologies Corp. were among U.S. companies that either reported first quarter losses on Tuesday or said profits were down from a year earlier.

OPEC has largely adhered to 4.2 million barrels a day of output cuts announced since September, a move that helped boost prices from below $35 a barrel in February. Leaders of the Organization of Petroleum Exporting Countries, who next meet May 28, have said they would like to see prices above $70.

OPEC decided not to make further supply cuts at its last meeting in March, saying it would instead focus on complying with existing output reductions.

In London, Brent prices rose 16 cents to $49.98 a barrel on the ICE Futures exchange.

[Associated Press; By ALEX KENNEDY]

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