PERTH, March 17 – Oil fell below US$47 (RM169.20) a barrel today, giving up previous session's gains, as news about US credit card defaults dampened sentiments and rekindled worries about the economic health of the world's No. 1 energy consumer.
Poor economic data from the US, which saw February's industrial output plummeting to its lowest level in almost seven years, was also a stark reminder that the 14-month long recession in the world's largest economy is far from over, analysts said.
US light crude for April delivery fell 41 cents to US$46.94 a barrel by 0222 GMT, reversing some of Monday's gains, that brought oil to settle US$1.10 higher at US$47.35.
London Brent crude fell 56 cents to US$45.90.
"With supply issues off the table for the next three to four weeks, demand issues issues will again dominate sentiments, with high chance of disappointing the market," said Mark Pervan, head of commodities research at the Australia and New Zealand Bank.
Oil's gains yesterday were helped in part by an early rally in US and European stock markets on growing confidence in the banking sector, which outweighed OPEC's decision not to cut production target further.
But the rally on Wall Street fizzled after American Express said credit card defaults were on the rise, undermining hopes of bank stability that had eased safe-haven buying of gold, debt and the dollar.
In addition, Citigroup Inc. one of the largest issuers of MasterCard cards -- disappointed analysts as its default rate soared to 9.33 per cent in February, from 6.95 per cent a month earlier, according to a report based on trusts representing a portion of securitized credit card debt.
Oil has tumbled US$100 from highs above US$147 in July last year as the global economic meltdown has dented demand for oil worldwide.
But despite weakening global demand, the Organization of the Petroleum Exporting Countries met on Sunday and decided not to cut output further, but rather concentrate on existing cuts that total 4.2 million barrels per day since September.
US INVENTORY
With OPEC uncertainties behind it, analysts said the market will look to economic indicators and the performance of equities markets for guidance.
Economic indicators due later today include US February Producer Price Index and Redbook weekly US retail sales.
The Federal Open Market Committee will also hold the first of a two-day meeting on interest rates.
In addition, traders will also be watching out for this week's inventory data as a gauge of energy demand in the United States.
A preliminary Reuters poll ahead of US weekly inventory reports showed analysts forecasts for a 500,000-barrel increase in domestic crude stocks last week.
On supply issues, suspected Nigerian militants attacked a Chevron oil pipeline in the Niger Delta on Friday and shut down around 11,500 barrels per day of output, the US energy firm said yesterday.
Suspected armed militants in gunboats also attacked an oil flow station, operated by Royal Dutch Shell, in the southern Niger Delta early on Monday, a military spokesman said. - Reuters
Show/Hide comments
Show/Hide comment form
