LONDON - Oil prices followed US stocks lower on Friday as slowing economic growth raised fears demand could falter for the world's biggest energy consumer.
US light crude for November delivery settled down US$1.04 to US$60.55, deepening a six-week slide of around US$15. London Brent crude fell 93 cents to
US$60.41.
"Volatility remains, but the overall market picture has not changed ... (economic) growth is slowing globally and inventories are lush on the crude and product sides of the equation," said Jason Schenker, economist at Wachovia Corp. in Charlotte, North Carolina.
A surprise drop in regional factory activity reported on Thursday suggested that the US economy may be losing momentum faster than most economists anticipated.
The Philadelphia Federal Reserve Bank said its business activity index tumbled to minus 0.4 in September from 18.5 in August, the first time the index had fallen below zero since April 2003, and indicating a decline in manufacturing.
"This just helps add to fears that demand isn't going to be as robust as many had expected," said Chip Hodge, managing director at John Hancock Financial Services.
The tumble of more than 20 per cent since early August has raised expectations that Opec, which decided two weeks ago to maintain production for the time being, will formally curb output to limit further losses.
Preliminary data from tanker tracker Petrologistics showed Opec pumped 400,000 barrels per day less crude so far in September, compared with the whole of August, on lower production from the group's top two producers, Saudi Arabia and Iran.
"It's a question of how far does it fall before there is some action out of Opec," Hodge said. "My gut tells me somewhere in the US$50 range."
Rising fuel inventories in the United States have also added to bearish sentiment ahead of winter.
Distillates stocks, which include heating oil, stand at their highest level since January 1999, while crude inventories are also in their upper range for this time of the year.
Domestic gas inventories also stand at record-high levels for this stage in the year.
Some analysts said the next two sessions would be critical in determining whether prices have reached a floor or if the market has further room to fall.
"In the absence of a specific event that causes prices to change course, a bottoming formation will begin to trace out as sentiment slowly changes. Price action today and Monday will go a long way to indicate whether this has occurred or not," said Fimat in a research note.
(Additional reporting by Richard Valdmanis in New York)
- REUTERS
LONDON - Oil prices followed US stocks lower on Friday as slowing economic growth raised fears demand could falter for the world's biggest energy consumer.
US light crude for November delivery settled down US$1.04 to US$60.55, deepening a six-week slide of around US$15. London Brent crude fell 93 cents to
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