Oil tumbles more than $1 on U.S. inventory build
NEW YORK (Reuters) - Oil tumbled more than $1 on Thursday, backing further off the record over $101 hit this week, as U.S. economic concerns and growing inventories offset expectations OPEC could cut output when it meets next month.
U.S. crude futures for April delivery settled down $1.47 at $98.23 a barrel, after the March futures contract hit a record of $101.32 a barrel before expiring on Wednesday.
London Brent settled $2.18 lower at $96.24.
New data showing a slumping U.S. economy pressured stock markets and encouraged oil traders to take profits from record highs.
The Philadelphia Federal Reserve Bank reported a sharp pullback in Mid-Atlantic manufacturing activity, while another report showed leading economic indicators fell 0.1 percent in January for a fourth straight monthly decline.
"The equity markets are weakening and the energy markets are following. Wall Street was able to shrug off some dismal economic data in the past two days but not today," said Jim Ritterbusch, president of Ritterbusch & Associates.
U.S. government data showed a sharp 4.2 million barrel build in crude stockpiles last week in the world's top consumer, nearly double analyst forecasts. Gasoline stocks swelled to 14-year highs and distillate inventories fell.
"Overall, the numbers have a bearish tilt, which should increase the emphasis on the OPEC meeting in March with regards to production cuts that some in the marketplace are anticipating," said Chris Jarvis, senior analyst at Caprock Risk Management, New Hampshire.
Comments by OPEC ministers that the group could hold or even reduce output at a March 5 meeting helped send oil on the record rally approaching the inflation-adjusted high of $102.53 hit in April 1980, a year after the Iranian revolution.
"We will not just react to $100 oil," Qatar's oil minister, Abdullah al-Attiyah, told Reuters on Thursday. "OPEC will move when it sees physical demand for its oil."
Oil demand should fall seasonally in the second quarter as the northern hemisphere winter ends, he said, adding that customers had requested less oil for March.
But the International Energy Agency, which advises industrialized countries on energy matters, has urged OPEC to at least keep oil production levels unchanged to rebuild low crude stocks.
LOOKING FOR A CORRECTION
Legendary Oil investor T. Boone Pickens said on Thursday he has a short position on oil and natural gas on expectations that prices will fall in the near term, and analysts said fundamentals may no longer support triple-digit oil.
"More and more people are of the view that crude at $100 is overpriced and simply far detached from market fundamentals," said Ritterbusch. Continued...
