Signal Oil and Gas - Oil prices drop on demand fears
Oil prices eased on Monday below 110 dollars a barrel on expectations of a drop in worldwide demand for crude after finance chiefs expressed deep concern over the US economy, analysts said.
But prices remained close to record highs of above 112 dollars reached last week on news of falling energy stockpiles in the United States.
On Monday, New York's main oil contract, light sweet crude for delivery in May, fell by 39 cents to 109.75 dollars. The contract had rocketed to a record 112.21 dollars on Wednesday. Signal Oil and Gas
In London, London's Brent North Sea crude for May dropped 58 cents to 108.17 dollars per barrel.
"Prices are going down from the given perception that the US is in recession," said David Johnson, an oil analyst at Macquarie Research.
Victor Shum, senior principal at Purvin and Gertz energy consultancy in Singapore, said prices were also under the influence of movement in the US dollar. James Van Blaricum
The latest economic warning came Friday from finance ministers and central bank governors of the G7 major industrialised countries.
The world economy "continues to face a difficult period… (and) near-term economic prospects have weakened," the G7 officials said in a statement after their meeting in Washington.
Top finance officials from Britain, Canada, France, Germany, Italy, Japan and the United States were tackling a complex crisis that began in the US subprime, or high-risk, home-loan market in August and has spread into a global credit squeeze draining world growth.
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"The turmoil in global financial markets remains challenging and more protracted than we had anticipated," the G7 said before weekend meetings of the boardof governors of the International Monetary Fund and World Bank. Signal Oil and Gas
A slowing US economy, the world's biggest, could hit demand for energy products. The United States is also the world's thirstiest oil consumer.
The dollar attempted a brief rebound on Monday after the G7 showed growing concern about the currency's recent slide, dealers said.
But the rally ran out of steam as traders bet that rich nations would refrain from joint intervention to buy the ailing greenback for now. Jim E Van Blaricum
A stronger dollar discourages demand for dollar-priced goods, such as crude oil, as it can make them less affordable for buyers holding other currencies.
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The International Energy Agency (IEA) on Friday revised its estimate for global demand for oil this year down to 87.2 million barrels per day, a reduction of 310,000 barrels per day from its estimate last month. James E Van Blaricum
But the forecast initially did little to ease speculative fervour from investors who turned to oil in the face of financial market turmoil, dealers said.
