Friday November 21, 09:04 PM
Oil prices drift up, stay under 50 dollars
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NEW YORK (AFP) - Oil prices drifted higher but held under 50 dollars per barrel Friday, hovering near multi-year lows on concerns over weakening demand and the prospect of a global recession.
The New York contract for light sweet crude for delivery in January gained 51 cents to close at 49.93 dollars a barrel.
Earlier Friday, New York crude fell to 48.25 dollars -- the lowest point since May 2005.
In London, Brent North Sea crude for January rose 1.11 dollars to settle at 49.19 dollars a barrel. The Brent contract had earlier dropped to 47.40 dollars, its lowest level since February 2005.
There were no major economic reports, but markets were still in shock over the weak data from this week, including a surge in US unemployment claims to a 16-year high.
"The staggering initial jobless claims data yesterday took no prisoners," said John Kilduff at MF Global.
"The list of delayed energy expansion projects grows daily."
Kilduff said prices could rebound sharply at the first sign of an economic upturn but that some oil traders are forecasting a drop in US economic activity of as much as 6.0 percent in the fourth quarter.
Oil on Thursday tumbled under 50 dollars for the first time since early 2005 as plunging equities and weak US economic data sparked fresh concern that a global recession would slash demand.
Oil prices have plunged two-thirds since striking record highs above 147 dollars in July when fears of supply disruptions had helped to send them rocketing.
The fall below 50 dollars reflects an assumption that demand will be affected not only in Western countries but in China and India, whose rapid growth was a also major force pushing prices to record highs earlier this year, said Jason Feer of energy market analysts Argus Media.
"The market is fully internalising the realization that the coming recession is going to be pretty significant and is likely to affect demand in some of the emerging countries that have been propping up the market," Feer said.
Action should meanwhile be taken to halt the decline in oil prices, Libya's OPEC representative told AFP on Friday.
Nevertheless, Shukri Ghanem -- the head of Libya's national oil firm and its envoy to the OPEC oil cartel -- did not explicitly repeat his call for oil production to be cut when the organization meets in Cairo on November 29.
Ghanem said the group should examine whether the fall in prices was the result of weaker consumption or of speculators liquidating their positions in the market.
"The oil market needs some kind of action," he said, but added: "Of course the falling price hits our earnings, but we're not worried because it can't last. We expect a turnaround."
Last month, the Organization of Petroleum Exporting Countries (OPEC) cut its official oil output quota by 1.5 million barrels a day from November 1 but it had no lasting impact on prices.
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