Oil dips below $49 on weak U.S. economic data
NEW YORK (Reuters) - Oil prices slipped below $49 a barrel on Tuesday as weak U.S. economic data triggered a bout of profit-taking, outweighing rising geopolitical tensions and OPEC production cuts that threaten to tighten supplies.
U.S. crude for February delivery fell 23 cents to settle at $48.58 a barrel after reaching a high of $50.47 earlier in the day. London Brent settled at $50.53 a barrel, up 91 cents.
Dealers said a fresh batch of gloomy economic data from the United States would make it tough for crude prices to make a sustained push through $50 a barrel.
"Resistance at the $50 area is going to be like $40 was before it. The economic data was not helpful (for crude prices), but the weak economic situation should be priced in and not something new," said Nauman Barakat, senior vice president at Macquarie Futures USA.
Data released Tuesday showed that pending sales of U.S. homes dropped in November to their lowest level in at least seven years and that the country's services sector shrank for the third consecutive month in December.
Oil has tumbled from a record high of $147.27 reached in July as the global downturn eroded demand.
Fuel inventories are rising as demand slows. A report from the U.S. Energy Information Administration due on Wednesday is forecast to show that supplies of crude, distillates and gasoline increased last week.
Israel's recent incursion into Gaza, however, was seen as supportive. While the conflict does not directly threaten any oil supplies, unrest in the Middle East can bolster prices because countries in the region pump about a third of the world's oil.
Oil prices have risen from about $35 a barrel since Israel launched its Gaza offensive on December 27.
Also adding support Tuesday, Russia's row with Ukraine over natural gas supplies triggered supply disruptions to parts of Europe, echoing a similar dispute three years ago that raised questions about Russia's reliability as an energy exporter.
Crude gains were also encouraged by news that Kuwait plans to cut oil supplies to U.S. and European buyers by 10 percent later this month, bringing the producer in line with OPEC targets. The nation also will cut supplies to Asian customers.
The Organization of the Petroleum Exporting Countries has cut output three times since September in a bid to halt the price decline.
(Additional reporting by Alex Lawler in London; editing by Jim Marshall)
