Oil fell below $51 a barrel on
Monday, extending the previous sessions' losses, pressured by a
stronger U.S. dollar and a slump on global stock markets.
The U.S. government's rejection of turnaround plans for
troubled automakers GM (GM.N) and Chrysler also dampened
investor sentiment and encouraged selling.
U.S. oil for May delivery CLc1 fell $1.85 to $50.53 a
barrel by 0926 GMT. The contract fell $1.96 to settle at $52.38
a barrel on Friday, pulling back from Thursday's four-month
high. London Brent crude LCOc1 fell $1.58 to $50.40.
"Stock markets have taken a bit of a pounding, the dollar
has improved and the U.S car industry news have all put a lot of
pressure on oil markets this morning," said Rob Montefusco, a
trader at Sucden Financial in London.
European stock markets followed Asian shares lower on
Monday, while U.S. stock futures pointed downwards after the
Obama administration's autos task force rejected turnaround
plans for GM and Chrysler, raising the prospect of bankruptcies
that could further hurt the ailing U.S. economy. [ID:nSP426975]
This renewed spirit of risk aversion strengthened the U.S.
dollar, which rose against other major currencies on Monday,
adding downward pressure on oil prices. [USD/]
Oil has had a bullish first quarter of 2009, closing on
Friday some 17 percent higher than the start of the year, thanks
to rallying stock markets and tightening oil supplies as the
Organization of the Petroleum Exporting Countries (OPEC) curbs
exports.
However, the global economy remains weak, leaving analysts
sceptical over the longevity of oil's rally.
Industrial output from Japan, the world's No. 3 energy
consumer, fell by a greater-than-expected 9.4 percent in
February, as weak demand weighed on an economy mired in its
worst recession since World War Two, but factories forecast a
small rise in production in coming months. [ID:nTKU103331]
"The overall demand outlook, at least in the short term,
continues to look quite bleak. The rally seen in the last two
weeks might perhaps have run its course," said Toby Hassall,
head of research at Commodities Warrants Australia.
Also casting a pall over oil prices were comments on Sunday
from the Organisation for Economic Cooperation and Development
(OECD) that unemployment rates were set to reach double digits
in many developing and advanced countries. [ID:nLT15780]
Still, analysts said hopes that the U.S. economy had finally
turned a corner were offering some underlying support for oil,
keeping prices above the psychologically important $50-level.
President Barack Obama said in an interview published on
Sunday that he saw "glimmers of stabilization" in some areas of
the U.S. economy, including pockets of the domestic housing
market. [nN29271448]
Leaders of the Group of 20 developed and developing nations
meet on April 2, hoping to restore global growth by the end of
2010, the Financial Times reported on Sunday, quoting a draft
communique for a summit this week. [ID:nLU149015]
OPEC will be eyeing the G20 meeting, hoping it will agree
measures to shore up the global economy and bolster oil demand.
