Oil falls below $51 in Asian trade
Sunday, 8 March 2009
SINGAPORE, Apr 7 (AP): Oil fell below $51 a barrel Tuesday in Asia as doubts grew that crude's two-month rally can be sustained while global demand remains weak.
Benchmark crude for May delivery fell 31 cents to $50.74 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange. The contract fell $1.46 on Monday to settle at $51.05.
Oil traders are looking to the beginning of first quarter corporate earnings season Tuesday for signs the worst of a severe recession could be over in the US.
Oil prices jumped from below $35 in February to above $54 last month as investors speculated that the US will likely avoid a depression this year. But some analysts fear there hasn't been enough evidence of economic recovery to warrant the recent run-up in prices.
Aluminum producer Alcoa Inc. is the first major company scheduled to announce earnings results Tuesday.
"The broad picture is that of a very weak international economy," said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney. "I think the lift in oil prices was a little premature."
Crude investors brushed off a dismal US jobs report when it was released on Friday that showed the unemployment rate rose to 8.5 per cent in March, a 25-year high. But the accumulation of months of massive layoffs will likely erode consumer demand for the rest of the year, Moore said.
"It's an indication of how weak the US economy is," he said. "Concerns about weakness in US consumption are likely to remain dominant and continue to bite away at the market's optimism."
Moore said he expects the price of oil to drift down to the $40s during the second quarter.
In other Nymex trading, gasoline for May delivery rose 2.15 cents to $1.50 a gallon and heating oil gained 1.33 cents to $1.43 a gallon. Natural gas for May delivery was steady at $3.73 per 1,000 cubic feet.
In London, Brent prices rose 4 cents to $52.28 a barrel on the ICE Futures exchange.
Benchmark crude for May delivery fell 31 cents to $50.74 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange. The contract fell $1.46 on Monday to settle at $51.05.
Oil traders are looking to the beginning of first quarter corporate earnings season Tuesday for signs the worst of a severe recession could be over in the US.
Oil prices jumped from below $35 in February to above $54 last month as investors speculated that the US will likely avoid a depression this year. But some analysts fear there hasn't been enough evidence of economic recovery to warrant the recent run-up in prices.
Aluminum producer Alcoa Inc. is the first major company scheduled to announce earnings results Tuesday.
"The broad picture is that of a very weak international economy," said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney. "I think the lift in oil prices was a little premature."
Crude investors brushed off a dismal US jobs report when it was released on Friday that showed the unemployment rate rose to 8.5 per cent in March, a 25-year high. But the accumulation of months of massive layoffs will likely erode consumer demand for the rest of the year, Moore said.
"It's an indication of how weak the US economy is," he said. "Concerns about weakness in US consumption are likely to remain dominant and continue to bite away at the market's optimism."
Moore said he expects the price of oil to drift down to the $40s during the second quarter.
In other Nymex trading, gasoline for May delivery rose 2.15 cents to $1.50 a gallon and heating oil gained 1.33 cents to $1.43 a gallon. Natural gas for May delivery was steady at $3.73 per 1,000 cubic feet.
In London, Brent prices rose 4 cents to $52.28 a barrel on the ICE Futures exchange.