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Oil prices rose slightly towards 59 dollars a barrel as global stock markets rebounded
LONDON (AFP) — Oil prices fell towards 58 dollars on Friday as news of a deepening recession for Europe further dampened hopes of a quick rebound in energy demand, analysts said.
New York's main futures contract, light sweet crude for delivery in June, dropped 27 cents to 58.35 dollars a barrel after rising earlier Friday in line with firmer stock markets.
Brent North Sea crude for July delivery shed 52 cents to 58.07 dollars. The June contract expired on Thursday priced at 56.69 dollars.
"Markets were a little lower ... after data from Europe disappointed," said Nimit Khamar, energy analyst at Sucden brokers in London.
The 16 nation eurozone economy contracted a record 2.5 percent in the first quarter as Europe lurched deeper into recession while Germany suffered its biggest blow for 40 years.
Accounting for a third of eurozone output, Germany contracted 3.8 percent in the first three months compared to the final quarter of 2008, when the economy shrank 2.2 percent, the statistics office said.
France, Germany's main partner and the second-biggest eurozone economy, meanwhile entered recession as output fell 1.2 percent after a 1.5 percent drop in the last quarter of 2008.
The French finance minister said this meant the economy was set to shrink three percent this year. Figures out Friday in other European countries -- Austria, Italy, Hungary and Norway -- painted a similarly bleak picture.
On Thursday, the International Energy Agency forecast a drop in global oil demand, saying optimism about an economic recovery was not reviving appetite for energy.
In its latest monthly report, the IEA trimmed its forecast for 2009, which it estimated at 83.2 million barrels per day (bpd), three percent lower than last year and the sharpest annual fall since 1981.
Last month, it had estimated 2009 demand at 83.4 million bpd.
The IEA is the oil monitoring and policy arm of the Paris-based Organization for Economic Cooperation and Development.
The weak demand outlook this week offset a surprise drop in crude inventories in the United States, the world's largest energy consumer.
US crude stockpiles fell 4.7 million barrels last week, the US government's Energy Information Administration said Wednesday. Analysts had expected a rise of 1.3 million barrels.
Inventories of gasoline, or motor fuel, dropped 4.1 million barrels.
The United States is gearing up for the start of its summer vacation period when Americans traditionally hit the roads in vast numbers.
Meanwhile OPEC, whose members together pump 40 percent of world crude, also cut its forecast for global oil demand this year -- saying this week that it would contract by 1.57 million barrels per day or 1.83 percent in 2009.
In its previous monthly bulletin released in April, OPEC had been pencilling in a contraction of 1.37 million bpd for 2009.
At the start of the week, New York crude hit a six-month peak of 60.08 dollars, boosted by hopes for recovery and a fall in the dollar that made dollar-priced crude cheaper for foreign buyers.
Oil prices remain well below record highs of above 147 dollars reached last July as the global recession hits demand.
Copyright © 2009 AFP. All rights reserved
