Oil rose above $91 a barrel on Friday as Opec oil producers agreed to keep output levels unchanged, despite fears of a looming recession in top consumer United States.
US light crude for March delivery fell 34 cents to $91.41 a barrel by 11.03am, off lows of $90.64 earlier in the session. It settled 58 cents lower in New York on Thursday, after rallying on the back of a rising stock market.
London Brent crude was 41 cents down at $91.80 a barrel.
Opec ministers meeting in Vienna agreed to keep oil supplies unchanged, rejecting calls from consumer countries to pump more oil amid worries that high fuel prices are adding to recessionary pressures in the West.
The decision was widely expected, with a chorus of ministers reiterating ahead of the meeting that the oil market was well supplied and a small group – Iran and Venezuela – even calling for a production cut at their next gathering on March 5.
Analysts said Opec appeared keen not to repeat its experience of 1997 when it boosted supplies ahead of an economic slowdown and prices collapsed to $10 a barrel.
"I think we will see a cut of up to 750,000 barrels per day announced next month to take effect from April 1 unless anything dramatic happens between now and then," said Simon Wardell of Global Insight.
Robin Batchelor, fund manager at BlackRock Merrill Lynch Investment managers, added: "Opec will not see their roles as defending economic growth but as that of providing a stable flow of oil at a fair price."
Opec's decision comes as concerns mount the United States is headed for a recession after a slew of recent economic data pointed to a deteriorating economy. A major US recession could impact the world economy and with it oil demand and prices.
Business activity in the US Midwest expanded in January but at a slightly slower rate than expected, as new orders dropped and price pressures accelerated, a report showed on Thursday.
Additionally, the number of US workers filing new claims for jobless aid surged last week to the highest since October 2005, and consumer spending softened at the end of last year, government data showed.
Analysts said the market was awaiting fresh data on US non-farm payrolls later on Friday for further clues about the pace of deterioration of the economy.
The US Federal Reserve has sought to ward off a recession by a series of interest rate cuts. It has cut rates by 125 basis points in two tranches in the last nine days.
A gloomy outlook for the US economy has sent many speculative investors, who helped propel oil's rally above $100 a barrel last month, into safer havens. (Reuters)
Opec leaves output unchanged