Oil edged down on Tuesday for the fourth straight day, relinquishing earlier gains, as fresh concerns about weaker demand in top oil consumer the United States tempted some players to cash in.
US crude was down 66 cents to $100,20 a barrel by 14.40am GMT, off the day’s high of $101,60, and sharply down from a record high of $111,80 touched on March 17.
London Brent crude fell 2 cents at $99,84 a barrel.
”Sentiment is likely to turn sour again and the latest US consumer confidence data is not encouraging news,” said Harry Tchilinguirian, analyst at BNP Paribas.
Data out of the United States showed consumer confidence sinking to a five-year low in March, rekindling uncertainty about the health of the US economy and hitting the dollar and Wall Street.
Other commodities held up. Gold rebounded after the dollar resumed its downward trend.
A recovery in the dollar from recent lows against the euro ahead of the Easter break had helped push oil prices down late last week and on Monday, as it pressured its nominal price.
”The question is how bad the US economy is going to be. So the tendency for the time being is to back off after people took profit from last week’s highs,” Tony Nunan, risk management executive at Tokyo-based Mitsubishi, said.
Oil has dropped more than $10 from last week’s record as investors have fled commodities on a view gains have been overdone.
A slowdown in the US economy, combined with a seasonal fall in demand in the second quarter, may drive oil prices below the $100 mark for the coming weeks, analysts said.
”There is a realisation in the market that the fundamentals really don’t justify prices to be so far above $100,” said Gerard Burg, a resource analyst at the National Australia Bank.
”One of the key factors is the recent build-up in US stockpiles and the stocks are looking pretty healthy at this stage,” he added.
Analysts expect a third rise in a row in weekly US crude oil stocks, seen up 700 000 barrels in the week to March 21, according to a preliminary Reuters poll ahead of Wednesday’s government data.
The nine analysts polled also expected a more bullish 1,6-million barrels fall in distillates stocks and a 900 000-barrel fall in gasoline inventories.
In Iraq security forces launched a major operation in the southern oil city Basra to bring it under government control.
Iraqi oil sources said Basra’s oilfields, which exported 1,54-million barrels per day in February, were operating normally on Tuesday. – Reuters