Oil falls below $45 per barrel

Crude oil fell below USD 45 a barrel on Friday,after rising more than 6 per cent overnight.

Written by Reuters | Seoul | Published:February 27, 2009 9:11 am

Oil fell below $45 a barrel on Friday,after rising more than 6 per cent overnight,as the impact of a two-day gasoline rally started to wear off and investors turned their attention to economic indicators again.

Oil prices fell in sympathy with US stocks,which declined 1.2 per cent on news the United States will rack up a $1.75 trillion budget deficit to overhaul healthcare and shore up the economy this year,the biggest since World War Two,and data showing jobless claims had jumped to a record 5.1 million

US crude for April delivery was down 61 cents at $44.61 a barrel by 0323 GMT,after a gain of $2.72 on Thursday.

London Brent crude lost 26 cents to $46.25.

Oil is on course to end the month up 7 per cent from January and up around 15 per cent from a week earlier.

“The boost (in oil prices) was sort of an instant reaction to the weekly inventory data and strong demand for gasoline,” said Mark Pervan,senior commodities analyst at Australia & New Zealand Bank. “I think the market went ahead of itself.”

A steep 3.4 million barrel drawdown in gasoline stocks announced earlier in the week sparked the two-day rally. NYMEX March RBOB jumped more than 13 per cent to register the highest front-month settlement since November.

OPEC members continue to mull the possibility of another output cut at its meeting in March,supporting the previous two days’ price gains.

Venezuela said it wanted OPEC to agree on a new oil output cut,but relatively small member Ecuador said oil prices were stabilising now,brushing off possibility that it might urge for a cut.

Market players are closely eyeing March heating oil and RBOB gasoline contracts that expire on Friday as well as key economic data,including euro zone January inflation and unemployment figures and US fourth-quarter GDP.

The Commerce Department’s GDP figures,due at 1330 GMT,are expected according to a Reuters forecast to show that the world’s largest economy had contracted at a 5.4 per cent annual rate,the deepest slide since the first quarter of 1982.

Reflecting the bleak demand outlook,Japanese industrial output fell a record 10 per cent in January and new jobs proved harder to find,showing Japan’s worst recession since World War Two is deepening.

Dried-up credit markets are having a severe impact on industries around the world. US durable goods orders,an important gauge of business activity,fell for a sixth month to a six-year low in January.

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