Oil prices bounce back above $50

AFP
AFP
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LONDON: Oil prices rose back above $50 a barrel on Friday as dealers sought bargain crude after the commodity struck the lowest levels for almost four years below the key psychological mark.

Light sweet crude for delivery in January gained 59 cents to $50.01 a barrel on the New York Mercantile Exchange (NYMEX).

Earlier Friday, New York crude fell to $48.25 – the lowest point since May 2005.

On London s InterContinental Exchange (ICE), Brent North Sea crude for delivery in January climbed $1.18 to $49.26.

Earlier Friday, Brent dropped to $47.40 a barrel – the lowest level since February 2005.

Crude futures had Thursday tumbled under $50 a barrel for the first time since early 2005, as plunging equities and weak US economic data sparked fresh concern that a global recession could ravage energy demand, traders said.

Oil prices have plunged two-thirds since striking record highs of above $147 in July, when fears of supply disruptions had helped to send them rocketing.

The fall below $50 reflects an assumption that demand will be affected not only in Western countries but in China and India, whose rapid growth was a also major force pushing prices to record highs earlier this year, said Jason Feer of energy market analysts Argus Media.

The market is fully internalizing the realization that the coming recession is going to be pretty significant and is likely to affect demand in some of the emerging countries that have been propping up the market, Feer said.

Analysts said sentiment has further been hammered by a dismal unemployment report in the United States, the world s biggest energy consumer.

US unemployment claims have surged to a 16-year high, offering more evidence the world s largest economy appeared to be sliding into a recession.

The European Union is already in recession.

The dominant influence remains the focus of oil markets on sagging demand, said David Moore, commodity strategist at Commonwealth Bank of Australia.

Our current view is that oil prices may face further downside in the next few weeks. The economic outlook is poor in the coming year, so oil consumption could weaken further… concerns about slowing consumption will remain prominent, added Moore, quoted by Dow Jones Newswires.

Action should meanwhile be taken to halt the decline in oil prices, Libya s OPEC representative told AFP on Friday. -AFP

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