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2008-12-04 05:17:57
SINGAPORE (Reuters) Oil fell below $46 a barrel to its lowest in nearly four
years on Thursday, extending four consecutive days of falls as continued demand
worries minimized bullish draws in U.S. oil stocks.
Oil prices have lost more than $100 a barrel since an all-time high of $147.27
hit in July, and some 16 percent from last week, as demand is seen weakening
worldwide and analysts expect it to contract this year and next.
U.S. light crude for January delivery fell $1.16 to $45.63 a barrel by 0655 GMT
(2:55 a.m. EST), off an earlier low of $45.30, the lowest since a $44.60 low
hit on February 9, 2005.
Oil settled down 17 cents at $46.79 on Wednesday.
London Brent crude slid $1.34 to $44.10, up from an earlier $43.80 low.
"Stabilization in macroeconomic expectations is likely to precede any switch in
oil market sentiment away from a mainly demand-side focus," Barclays Capital
said in its weekly oil data review.
Bullish oil data on Wednesday pushed prices higher during the session, when the
U.S. Energy Information Administration said crude stocks fell 400,000 barrels
in the week to November 28, against an expected 1.7 million barrels build.
Distillate stocks, which include heating oil, fell 1.7 million barrels to 125
million, against a forecast for a 300,000-barrel increase, while gasoline
supplies dropped 1.6 million barrels, having been expected to rise by 900,000
barrels.
But the product inventory falls came amid lower refinery utilization, which
fell 1.9 percentage points to 84.3 percent of capacity last week against a
predicted rise of 0.2 percentage point, showing weakening demand.
"Refiners began to cut processing rates significantly," said Jan Stuart,
economist in New York for UBS, in a report.
Worries about a deepening economic downturn resurfaced as a measure of the U.S.
service sector, which represents about 80 percent of U.S. economic activity,
slumped further than expected to a record low in November, according to the
Institute of Supply Management.
The Institute said its non-manufacturing index came in at 37.3 versus 44.4 in
October, and against expectations for a reading of 42.0.
Adding to the gloom, U.S. private employers cut 250,000 jobs in November, a
7-year high, and U.S. third-quarter labor costs were revised lower as the
recession hit jobs.
Growing economic woes and falling prices have prompted oil producer group OPEC
to consider another round of cuts to oil output when it next meets December 17
in Algeria.