Tuesday February 17, 12:21 PM
Oil price drops to $37 in New York
LONDON (AFP) - The price of New York crude oil slid to just above 37 dollars on Tuesday as falling demand boosts inventories in the United States, the world's biggest energy consumer, traders said.
New York's main futures contract, light sweet crude for delivery in March, fell 47 cents to 37.04 dollars a barrel.
Brent North Sea crude for April delivery gained 39 cents to 43.67 dollars a barrel.
Trading on the floor of the New York Mercantile Exchange (NYMEX) was shut on Monday owing to a public holiday in the United States, leaving investors able to trade only electronically.
The large crude inventory buildup in Cushing, Oklahoma, as well as the expiry of the March contract this Friday, helped pull the benchmark New York contract below 37 dollars, said Victor Shum of Purvin and Gertz energy consultants. Cushing is the delivery point for NYMEX crude.
"There is downward pressure on NYMEX crude on top of the (demand and supply) fundamentals which are quite gloomy for oil because of the weak economic outlook," said Shum.
The price differential between New York crude and Brent oil hit a record of more than 11 dollars last week, which analysts attributed to soaring energy stockpiles in the United States.
"Oil markets are likely to remain vulnerable to further losses with risk aversion on the rise and as bulls lose hope for a swift recovery in global economies following an array of negative economic data recently," said Sucden Financial analyst Nimit Khamar.
Last Friday, the OPEC oil producers cartel trimmed its forecasts for global oil demand, forecasting that it would shrink by 0.67 percent in 2009 because of "economic depression" in industrialised countries.
Also last week, the International Energy Agency cut its forecast for global oil demand this year, but warned about a future supply crunch because of current low investment levels.
The energy watchdog for industrialised nations forecast that global oil demand would measure 84.7 million barrels per day (bpd) on average in 2009 -- 570,000 bpd less than its last forecast made in January.
At this level, demand would be 1.1 percent or 1.0 million bpd less than in 2008, when demand also fell compared with the year earlier.
Crude futures have in recent months slumped from record highs of above 147 dollars a barrel reached last July when concerns about supply disruptions had sent them rocketing.
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