Sponsored by: Investment Center

Something new in your business?  Click here to submit your business press release

Chamber Corner | Main Street News | Job Hunt | Classifieds | Calendar | Illinois Lottery 

Oil momentum subsides after demand increase

Send a link to a friend

[February 27, 2009]  VIENNA (AP) -- Investor enthusiasm waned Friday, pulling oil prices lower to near $44 a barrel after a day-earlier surge in crude on evidence that protracted weak U.S. oil demand could be recovering.

Thursday's bullish price increase turned neutral as the worst recession since the Great Depression overshadowed news of unexpectedly low supply increases.

Benchmark crude for April delivery fell 64 cents to $44.58 a barrel by midday in Europe on the New York Mercantile Exchange. The contract jumped $2.72 on Thursday to settle at $45.22.

Oil prices have rebounded from below $35 last week on early evidence that the drop in U.S. crude demand may be stabilizing. Government data earlier this week showed that gasoline demand was up 1.7 percent from the same period last year.

"Most of the strengthening demand development can be attributed to lower pump prices, which has encouraged more driving," said Vienna's JBC Energy.

The U.S. Energy Department on Wednesday said crude inventories rose 700,000 barrels for the week ended Feb. 20, less than the 3.5 million barrel build-up analysts expected. While inventories rose, the trend appears to be slowing. Last week the government reported inventories fell slightly.


"All we've had is doom and gloom on the economic front. Now we're seeing U.S. demand up a little bit, and that's convinced people to get back into the market," said Gerard Rigby, an energy analyst with Fuel First Consulting in Sydney. "There was a little bit of overreaction, hence the profit-taking we're seeing today."

Dismal economic news reflecting the worst recession in decades still weighs on oil prices. The government reported Thursday that new jobless claims rose again and the number of Americans continuing to receive unemployment benefits has topped 5.1 million.

The Labor Department said first-time requests for unemployment benefits jumped to 667,000 from the previous week's figure of 631,000.

"There's probably too much bad economic news out there to let prices break out," Rigby said.

OPEC will likely announce a production cut of about 1 million barrels a day at the group's next meeting on March 15, adding to 4.2 million barrels a day of output reductions the 13-member cartel has pledged since September, Rigby said.

[to top of second column]


Leaders of the Organization of Petroleum Exporting Countries have said recently they would like oil to trade near $70 a barrel.

"If oil stays in the $40s, I think they'll cut again, but if the market goes above $50, they may not do much," Rigby said. "I think they'd like to see a minimum of $60."

Oil prices fell 78 percent to $32.70 a barrel in December from a record $147.27 in July, and for the last couple months, crude has traded in a range between $35 and $45. Investors who use technical analysis to follow trading trends say oil may be poised the trade higher.

"The downtrend has been broken this week," said Christoffer Molke-Leth, head of sales trading at Saxo Capital Markets in Singapore. "$41 to $48 could be the range next week."

In other Nymex trading, gasoline futures fell 2 cents to $1.28 a gallon, while heating oil slid 1 cent to $1.29 a gallon. Natural gas for March delivery dropped 1 cent to $4.07 per 1,000 cubic feet.

Brent prices fell 48 cents to $46.03 on the ICE Futures exchange in London.

[Associated Press; By JAKE NEUBACHER]

Associated Press writer Alex Kennedy in Singapore contributed to this report.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.



< Recent articles

Back to top


News | Sports | Business | Rural Review | Teaching & Learning | Home and Family | Tourism | Obituaries

Community | Perspectives | Law & Courts | Leisure Time | Spiritual Life | Health & Fitness | Teen Scene
Calendar | Letters to the Editor