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Oil drops 1 pct, consumer confidence weighs
March 12, 2010 / 3:11 AM / 8 years ago

Oil drops 1 pct, consumer confidence weighs

NEW YORK (Reuters) - Oil slipped more than 1 percent toward $81 a barrel on Friday, as data showing a drop in U.S. consumer confidence reignited investor concerns about energy demand in the world’s largest oil consumer.

<p>A man refuels his car at a petrol station in Sydney October 26, 2009. REUTERS/Daniel Munoz</p>

The front-month U.S. crude fell 87 cents to settle at $81.24, marking a 26-cent decline for the week. Earlier in the session, the contract had climbed as high $83.16, the highest since $83.95 on January 11.

In London, Brent crude fell 89 cents to settle at $79.39.

U.S. consumer sentiment declined slightly in early March, with Americans less positive about the job outlook, a survey released on Friday showed.

“The consumer confidence number and looking at the revision to January of the retail sales pulled crude back down,” Richard Ilczyszyn senior market strategist at Lind-Waldock in Chicago.

Profit-taking also pulled prices lower after the surge above $83, some analysts said.

Stocks on Wall Street stayed steady on Friday as the consumer sentiment data was offset by data showing U.S. retail sales rose unexpectedly last month.

IEA REPORT

Crude oil prices received little support from an International Energy Agency (IEA) report on Friday that said world oil demand this year will be slightly higher than previously expected because of growth in developing countries.

The agency lifted its absolute demand estimates for 2009 and 2010 by 70,000 barrels per day (bpd) from its estimate in February. It now expects world demand to average 86.57 million bpd this year.

“We revised up figures for both 2009 and 2010 on the basis of strong non-OECD demand,” David Fyfe, head of the oil industry and markets division of the IEA, told Reuters.

By contrast, the 2010 OECD forecast was revised down, largely due to expectations of lower first-quarter heating oil demand in Europe and continued North American weakness, notably in middle distillates, the IEA said.

Officials at the Organization of the Petroleum Exporting Countries, which meets in Vienna on March 17 to discuss production policy, have said they do not expect a change in targets while prices are within their desired range.

Additional reporting by Robert Gibbons and Gene Ramos in New York; Chris Baldwin in London; Alejandro Barbajosa in Singapore; Editing by Alden Bentley Reporting by Edward McAllister

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