RTRS: Oil falls towards $49, demand concerns return
Oil fell toward $49 a barrel on Friday, as bearish sentiment on demand and a firmer dollar offset optimism driven by stock market gains.
Crude prices have been supported this week by rallies in U.S. equity markets, which are seen as an indicator for the state of economic recovery.
But the gains in the dollar make oil more expensive in other currencies, while investors are still nervous about the financial sector ahead of the results of stress tests for U.S. banks due on May 4.
The U.S. government will later on Friday give the assumptions it will use for the stress tests.
U.S. crude fell 31 cents to $49.31 a barrel at 0339 GMT, while London Brent crude fell 41 cents to $49.70.
"At some point people must look at fundamentals... and understand that oil prices should be going down," Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd, said.
"The current weakness is pointing out a weaker trend in the future. The U.S. inventory data hasn't been priced into the market yet," he said.
Falling demand in the world's top consumer has been behind crude's $100 fall from its record high in July last year. Government data on Wednesday showed U.S. crude inventories had swelled to a fresh 19-year high last week.
Adding pressure on crude prices, the dollar firmed against the euro on Friday, as traders took profits on gains made a day earlier.
There was more weak economic U.S. economic data on Thursday. Existing home sales fell to a lower-than-expected rate in March, and the number of people claiming jobless benefits jumped to another record in early April.
Economic indicators due out later on Friday include U.S. durable goods orders for March, U.S. new home sales for March and the United Kingdom's first quarter preliminary GDP figures.
There were some bright spots in the otherwise gloomy economic outlook though.
China's economic growth will clearly improve in the second quarter, a leading government economist said, while U.S. Treasury Secretary Timothy Geithner said the decline in world trade may be abating and conditions in some financial markets have improved.
The European economy too is showing some positive signs that it is closer to a recovery than before, the EU's Economic and Monetary Affairs Commissioner Joaquin Almunia said.
