Oil prices stumbled below $49 a barrel Thursday in Asia as rising U.S. crude inventories and a stark demand forecast by the IMF doused investor optimism for a near-term recovery from the global recession.
Benchmark crude for May delivery fell 37 cents to $48.48 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange. The contract rose 30 cents Wednesday to settle at $48.85.
Oil prices shot above $54 a barrel last month from below $35 in February on expectations that the worst of recession may be over. But rising unemployment, falling consumer spending and poor corporate earnings have undermined investor confidence that an economic rebound is imminent.
"There hasn't been enough evidence of an improvement in fundamentals," said Toby Hassall, an analyst with investment firm Commodity Warrants Australia in Sydney. "That's why we've come back off the mid-$50s."
The Energy Information Administration said Wednesday that U.S. crude inventories for the week ended April 17 rose by 3.9 million barrels to the highest level since 1990. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos, expected a build of 3 million barrels.
Gasoline inventories rose by 800,000 barrels, which is 1 percent above year-earlier levels. Analysts expected stockpiles of the motor fuel to fall by 860,000 barrels.
Petroleum consumption dropped by more than 2 million barrels per day, compared with the same period last year. The four-week average use of 18.5 million barrels per day is the smallest draw since May 1999.
"Inventories are large and continue to rise," Hassall said. "The rate of increase of inventories is starting to look exponential. That makes it difficult for oil prices to rally."
