RTRS: Oil falls below $47 as U.S. economic worries return to fore
Oil fell below $47 a barrel on Tuesday, giving up previous session's gains, as news about U.S. credit card defaults dampened sentiments and rekindled worries about the economic health of the world's No. 1 energy consumer.
Poor economic data from the U.S., which saw February's industrial output plummeting to its lowest level in almost seven years, was also a stark reminder that the 14-month long recession in the world's largest economy is far from over, analysts said.
U.S. light crude for April delivery fell 41 cents to $46.94 a barrel by 0222 GMT, reversing some of Monday's gains, that brought oil to settle $1.10 higher at $47.35.
London Brent crude fell 56 cents to $45.90.
"With supply issues off the table for the next three to four weeks, demand issues will again dominate sentiments, with high chance of disappointing the market," said Mark Pervan, head of commodities research at the Australia and New Zealand Bank.
Oil's gains on Monday were helped in part by an early rally in U.S. and European stock markets on growing confidence in the banking sector, which outweighed OPEC's decision not to cut production target further.
But the rally on Wall Street fizzled after American Express said credit card defaults were on the rise, undermining hopes of bank stability that had eased safe-haven buying of gold, debt and the dollar.
In addition, Citigroup Inc (C.N) -- one of the largest issuers of MasterCard cards -- disappointed analysts as its default rate soared to 9.33 percent in February, from 6.95 percent a month earlier, according to a report based on trusts representing a portion of securitized credit card debt.
Oil has tumbled $100 from highs above $147 in July last year as the global economic meltdown has dented demand for oil worldwide.
But despite weakening global demand, the Organization of the Petroleum Exporting Countries met on Sunday and decided not to cut output further, but rather concentrate on existing cuts that total 4.2 million barrels per day since September.
U.S. INVENTORY
With OPEC uncertainties behind it, analysts said the market will look to economic indicators and the performance of equities markets for guidance.
Economic indicators due later on Tuesday include U.S. February Producer Price Index and Redbook weekly U.S. retail sales. The Federal Open Market Committee will also hold the first of a two-day meeting on interest rates.
In addition, traders will also be watching out for this week's inventory data as a gauge of energy demand in the United States.
A preliminary Reuters poll ahead of U.S. weekly inventory reports showed analysts forecasts for a 500,000-barrel increase in domestic crude stocks last week.
