Oil falls below $58 on weak demand, dollar

Daily News Egypt
3 Min Read

LONDON: Oil fell below $58 a barrel on Friday, pressured by weak global demand and as the US dollar firmed against the euro.

US crude for June delivery fell 63 cents to $57.99 a barrel by 1420 GMT, off an earlier low of $57.31. London Brent for July fell 83 cents to $57.76 in its first session of trade as the front-month contract.

Prices pared earlier losses after reports showed USconsumer prices were unchanged in April from March and industrial output declined at a slower pace, providing more evidence that the worst phase of the recession may be over.

The US dollar was slightly up against a basket of major currencies, having earlier risen following weak German economic data. A stronger dollar can limit investor demand for oil and other commodities.

US oil hit a six-month high above $60 a barrel on Tuesday, before weak demand outlooks halted the recent rally.

The International Energy Agency said on Thursday world oil demand this year will post the sharpest annual decline since 1981 as the economy struggles to bounce back.

Demand will contract by 2.56 million barrels per day (bpd) in 2009, the IEA, which advises 28 industrialized countries, said in a monthly report. This came a day after the Organization of the Petroleum Exporting Countries (OPEC) said global oil demand would drop 1.57 million bpd in 2009 to average 84.03 million bpd.

Despite falling demand for oil, OPEC, which has announced 4.2 million bpd of production cuts since September in a bid to tighten the market, also pumped more oil last month than in March, the IEA said.

OPEC members’ compliance with production quotas fell to 78 percent in April from 83 percent a month earlier. The group meets on May 28 in Vienna to set supply policy.

Renewed unrest in Nigeria, Africa’s biggest oil producer, offered support for prices.

Nigerian militants have hijacked two cargo ships in the Niger Delta and given oil companies until Saturday to evacuate staff, warning they would attack helicopters and planes after the deadline, after heavy clashes with the military.

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