RTRS: Oil falls to $44 on mixed bag of economic gloom
Oil dropped nearly $2 on Tuesday to around $44 barrel, after an almost 9 percent fall the previous day, as traders awaited more clues on demand from U.S. economic, corporate and oil inventory data.
The focus was back on the state of the economy in the world's biggest energy consumer after Bank of America (BAC.N: Quote, Profile, Research, Stock Buzz), the largest U.S. bank, posted a jump in bad loans, sending equity markets and most commodities down.
Shares on Wall Street and Asia fell sharply, but European shares were firmer on Tuesday after British supermarket giant Tesco showed its resilience to the downturn, reporting a 10 percent jump in profits to a record $4.6 billion. EU.
U.S. crude for May delivery, which expires later on Tuesday, dropped $1.58 to $44.30 a barrel by 1337 GMT (9:37 a.m. EDT), after plunging $4.45 on Monday. London Brent crude fell $1.13 o $48.73.
"Oil fundamentals are not tight enough to carry crude above $55 a barrel and as soon as the combined support of strong equities and weak dollar goes missing then crude oil starts to move back," Petromatrix analyst Olivier Jakob said.
Strength in the dollar contributed to oil's sharp fall on Monday, as dollar-priced commodities become more expensive for holders of other currencies.
The Chicago Board Options Exchange Volatility Index .VIX, Wall Street's barometer for fear, jumped more than 15 percent on Monday, the largest daily percentage gain since January 20.
OPEC
Oil has been trading in a tight band between $46 and $55 for the past month, after rallying steadily since mid-February from the mid-$30s, helped by hopes of economic recovery and OPEC's high compliance with agreed supply cuts.
The Organization of the Petroleum Exporting Countries meets again on May 28.
Iran's OPEC governor said on Tuesday the producer group may decide to further cut its oil output if the oil market continued to remain oversupplied, and expressed concern consumer countries are stockpiling oil due to lower prices.
"OPEC may decide to further cut its output in its next meeting if the market remains oversupplied," Mohammad Ali Khatibi told reporters.
"Consumer countries are increasingly stockpiling oil."
The producer group has cut member output quotas by 4.2 million barrels per day since September in a bid to underpin prices as the global slowdown has cut demand.
Despite OPEC's efforts, crude oil inventories in the United States have risen to the highest level since September 1990.
Traders will be eyeing an early snapshot of this week's U.S. oil inventory data, with the American Petroleum Institute due to release figures later in the day ahead of the more authoritative numbers from the Energy Information Administration on Wednesday.
U.S. crude oil inventories likely rose for the seventh week in a row last week on higher imports and as seasonal maintenance cut refinery demand, a preliminary Reuters poll showed.
On average, the poll forecast a crude inventories increase of 2.6 million barrels, an 800,000 barrel drawdown in gasoline stocks and a 500,000 barrel fall in distillates.
