Oil retreats towards $54 after brief bounce
Tue Nov 18, 2008 5:39am EST
LONDON (Reuters) - Oil fell back toward $54 a barrel on Tuesday, setting a new near 22-month low as the gloomy outlook for the world economy helped extinguish a brief rally.
U.S. light crude oil for December delivery was 55 cents lower at $54.40 a barrel by 1029 GMT. It touched a new 22-month low of $54.13, its lowest since January 2007.
London Brent crude fell 55 cents to $51.76 a barrel.
"There was a short-lived rally," said Christopher Bellew, of Bache Commodities Ltd, "But what's always driving it downwards is the weak fundamentals."
The capture of a Saudi oil tanker by pirates off east Africa
had helped spur the market's brief rebound, he said.
Oil has fallen more than 60 percent from its July record above $147 a barrel as the credit crisis has hit the real economy and dampened fuel demand in the United States, the world's biggest energy consumer and other industrial countries.
"Oil is still driven by concern about the weak outlook for oil consumption," said David Moore, commodity strategist at Commonwealth Bank of Australia. "Equity markets are not helping."
European shares fell more than 2 percent following on from losses in Japan and the United States.
Evidence of the severity of the global economic situation emerges daily.
On Monday, Japan became the latest major economy to fall into recession and U.S. bank Citigroup is to cut 52,000 jobs, one of history's largest layoffs.
China, the world's second biggest energy consumer, became a net diesel exporter in October for the first time since August 2007, as heavy inventories and higher refinery output reduced import needs.
OPEC, source of more than a third of the world's oil, has so far agreed to remove around 2 million barrels per day from oil markets to try to halt the price slide.
Iran, for example, has called for another 1 million to 1.5 million bpd cut.
OPEC's President Chakib Khelil said last week a gathering of core oil producers in Cairo on November 29 could be expanded into a full-scale OPEC meeting.
But at the weekend he said the group might have to wait until another session set for December 17 in Oran, Algeria to reduce output further.
The group's Secretary General Abdullah al-Badri also said late on Monday it was too soon to say whether further action was needed yet.
Looking to U.S. fuel inventory data on Wednesday, a preliminary Reuters poll predicted crude stocks are likely to have risen last week by 900,000 barrels.
(Reporting by Jane Merriman in London and Annika Breidthardt in Singapore)
