Oil falls to $ 94 as econ worries begin to weigh

Written by:
Subscribe to Oneindia News

SEOUL, Nov 20 (Reuters) Oil prices fell on Tuesday, succumbing to fresh concerns over the U.S. economy that struck down other markets a day ago, although weakness in the U.S. dollar and forecasts for a chilly December kept losses in check.

U.S. light crude for January delivery fell 39 cents to .25 a barrel by 0256 GMT, after rising 80 cents on Monday, still within sight of the record .62 record on Nov. 7. London Brent crude fell 35 cents to .93 a barrel.

Oil prices gained on Monday despite renewed jitters over mortgage losses and the prospect for a weakening U.S. economic that fuelled sharp losses on Wall Street and in other commodity markets such as copper and gold. WRAP] But further losses in Asian stock markets and escalating worries about credit market losses began to take their toll on Tuesday, raising concerns about oil demand in the world's top user, where consumption has already begun to dip.

''Oil is retracing price gains as traders expect demand to fall with the weak U.S. economy,'' said Lee Moon-dae, oil futures analyst at Korea Energy Economics Institute.

''The loss is obviously limited as most analysts don't believe that the U.S. economy will experience a hard landing.'' Expectations of another rise in U.S. crude stocks also dampened the sentiment. Weekly inventories are expected to have risen by 1.2 million barrels as refiners import more oil to meet pre-winter demand, a preliminary Reuters poll found. S] The data is also expected to show a 500,000 barrels drop in distillate inventories and an 800,000 barrels increase in gasoline stocks.

On the supportive side, the U.S. dollar hovered near an 18-month low against the euro on Tuesday as investors remained cautious about risky currency trades. The dollar's decline has helped drive oil prices toward 0 a barrel.

And traders are also bracing for strong oil demand in the U.S. Northeast next month after forecaster WSI Corp predicted the region will face below-normal temperatures in December before warmer-than-normal weather blows in early in 2008.


Please Wait while comments are loading...