Oil Prices Fall Below $51 Per Barrel
Re-Emerging doubt about global demand drove oil prices below $51 a barrel yesterday.
But the market is poised to go higher if the start of first quarter corporate earnings season shows signs that the worst of a severe recession can be over in the U.S.
Benchmark crude for May delivery fell 63 cent to $50.42 a barrel by noon in Europe in electronic trading on the New York Mercantile Exchange. The contract fell 1.46 on Monday to settle at $51.05.
Oil prices jumped from below $35 in February to above $54 last month as investors speculated that the U.S. will likely avoid a depression this year. But some analysts fear there hasn't been enough evidence of economic recovery to warrant the recent run-up in prices.
Aluminum producer Alcoa Inc .is the first major company scheduled to announce earnings results yesterday.
'The broad picture is that of a very weak international economy, said David Moore, commodity strategist at common wealth Bank of Australia in Sydney.'I think the lift in oil prices is a little premature.'
Crude investors brushed off a dismal U.S. jobs report when it was released last Friday that showed the unemployment rate rose to 8.5 per cent in March, a 25-year high .But the accumulation of months of massive layoffs will likely erode consumer demand for the rest of the year, Moore said.
'It's an indication of how weak the U.S. economy is,' he said. 'Concerns about weakness in U.S. consumption are likely to remain dominant and continue to bite away at the market's optimism.'
Moore said he expects the price of oil to drift down to the $40s during the second quarter.
Gasoline prices have also been recovering somewhat from the lows of a few months ago. But they remain far below the $4-gallon threshold of last summer.
Analyst and trade Stephen Schork, cited U.S. Energy Information Administration figures showing retail prices at $2.037 a gallon on Monday, noting: 'That is $ 1.295 or 39 per cent cheaper than a year ago.
Gasoline and heating oil for May delivery fell by more than a penny to $1.46 a gallon and $1.40 a gallon on the Nymex. Natural gas for May delivery also slipped, down more than three cents to fetch $3.70 per 1,000 cubic feet.
In London, Brent prices fell by 40 cents to $51.84 a barrel on the ICE futures exchange.