Oil prices plummet on renewed US demand fears
LONDON (AFP) — World oil prices fell Friday on more disappointing US economic data and after OPEC crude exporters froze their crude production levels in line with market expectations.
New York's main contract, light sweet crude for delivery in March, plunged 1.89 dollars to 89.86 dollars per barrel, after briefly rising into positive territory following the OPEC decision in Vienna.
Brent North Sea crude for March delivery shed 1.70 dollars to 90.51 dollars a barrel.
The market was pressured as more bad news piled up on the state of the US economy.
On Friday, it emerged that the US economy lost 17,000 nonfarm jobs in January in a surprise drop in employment for the first time in over four years.
Traders are concerned about US recession fears because the United States is the world's biggest consumer of energy followed by number two China.
"January's employment report doesn't decisively solve the question of whether the US economy is in, or shortly headed for, a recession," said analysts at Capital Economics.
"However, the surprisingly weak 17,000 decline in non-farm payrolls last month does suggest that the odds of a recession may now be more than 50/50."
Elsewhere Friday, OPEC left unchanged its oil production ceiling, snubbing US demands for an increase as the cartel focuses on supporting prices that have fallen 10 percent since the start of the year.
Explaining its decision, the Organisation of Petroleum Exporting Countries said that stockpiles of crude were likely to increase in the first half of 2008.
"In view of the current situation, coupled with the projected economic slowdown, the conference agreed that current OPEC production is sufficient to meet expected demand for the first quarter of the year," the group said in an official statement.
"At the same time, however, the conference noted that the significant uncertainties associated with the projected downturn in the global economy called for vigilant attention to their impact on key market fundamentals (of supply and demand) until its next Meeting on 5 March 2008," it added.
OPEC, which pumps 40 percent of world oil, decided to keep official daily output at 29.67 million oil barrels.
Since striking a high above 100 dollars at the start of the year, the price of oil has slid owing to fears of a US recession and a global economic slowdown.
But crude futures are still almost double the level of a year ago, having hit a record 100.09 dollars in early January.
Earlier this week, prices jumped higher after the US Federal Reserve slashed a half-point from its key interest rate to ward off recessionary risks in the US economy.
