Oil falls more on demand concerns

 

Oil fell for the fourth consecutive day on Tuesday as concerns about weaker demand in the US, the world's largest consumer, extended a retreat that has knocked a tenth off prices since last week.


US light crude for May delivery stood 79 cents lower at $100.07 a barrel by 0955 GMT, up from an earlier low of $99.66, but sharply down from a record high $111.80 a barrel touched on March 17.

London Brent crude was down 37 cents to $99.49 a barrel, recovering from an earlier $98.70 low.

"The question is how bad the US economy is going to be. So the tendency for the time being is to back off after people took profit from last week's highs," Tony Nunan, risk management executive at Tokyo-based Mitsubishi, said.

Oil has dropped more than $10 from last week's record as investors fled commodities on a view that gains had been overdone.

A slowdown in the US economy, combined with a seasonal fall in demand in the second quarter, may drive oil prices below the $100 mark for the coming weeks, analysts said.

"There is a realisation in the market that the fundamentals really don't justify prices to be so far above $100," said Gerard Burg, a resource analyst at the National Australia Bank.

"One of the key factors is the recent build-up in US stockpiles and the stocks are looking pretty healthy at this stage," he added.

Analysts expect a third rise in a row in weekly US crude oil stocks, seen up 700,000 barrels in the week to March 21, according to a preliminary Reuters poll ahead of Wednesday's government data.

The nine analysts polled also expected a more bullish 1.6 million barrels fall in distillates stocks and a 900,000-barrel fall in gasoline inventories.

A recovery in the US dollar from recent lows against the euro also helped drive oil prices down on Monday.

But the greenback fell broadly on Tuesday, snapping four days of gains, with persistent nerves on US economic health dominating sentiment. (Reuters)

 

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