Oil prices extend losses on demand fears
LONDON (AFP) — Oil prices fell further on Thursday as traders tracked worries about slower US economic growth dampening global demand for crude.
New York's main contract, light sweet crude for delivery in February, gave up 63 cents to 95.04 dollars per barrel.
Brent North Sea crude for February slid 42 cents to 93.95 dollars.
"Crude futures were lower (on Thursday) as the threat of recession continues to play on market participants' minds," said Sucden analyst Nimit Khamar in London.
"Many are concerned that current market turmoil could now have a much larger impact on oil demand growth than previously expected," he said.
"However, the market remains tight and therefore is vulnerable to supply (shocks), which could trigger a significant spike higher."
Traders remain fearful that a potential recession in the United States could slash demand from the biggest energy consuming nation in the world.
Investment bank giant Goldman Sachs has warned that the American economy was in recession or soon will be due to problems in the housing and credit markets.
Bache Financial trader Christopher Bellew said: "My picture for the first quarter (of 2008) is we'll see very disappointing demand because of high prices and a recession in the US."
Prices had fallen Wednesday as the US Department of Energy (DoE) posted an unexpectedly sharp drop in crude inventories for last week -- but also revealed a rise in refinery output.
The DoE said US crude reserves sank by 6.8 million barrels in the week ended January 4. That was the eighth weekly consecutive fall and outstripped expectations for a 1.2-million-barrel drop.
At 282.8 million barrels, US crude oil inventories were last week at their lowest level since October 15, 2004.
However, traders focused on an increase in refinery use, operating at 91.3 percent of capacity, the highest rate since August.
"We saw a big decline in (US) crude but on the positive side, we saw an increase of one point in refinery utilization and builds in both distillate and particularly gasoline (stocks)," said analyst Veronica Smart at the Energy Information Centre.
Last week, crude prices shot up to record levels, partly buoyed by the previous DoE report of falling crude supply and political tensions in nuclear-armed Pakistan.
New York crude struck a record 100.09 dollars last Thursday, when Brent had also hit an historic 98.50 dollars.
