NEW YORK (Reuters) - Oil fell nearly 4 percent to below $44 a barrel on Thursday as the deteriorating economic outlook heightened expectations that fuel consumption would shrink further.
The losses tracked a slide in equities markets, with major U.S. indexes off about 4 percent after a warning from General Motors (GM.N) it could go bankrupt and persistent uncertainty about the fate of the banking sector.
“Economic and demand worries reflected in Wall Street’s sharp drop today are part of the reasons crude futures have fallen today,” said Kyle Cooper, director of research at IAF Advisors in Houston.
U.S. crude slipped $1.77 to settle at $43.61 a barrel, while London Brent crude fell $2.48 to $43.64.
The losses were encouraged by data showing euro zone gross domestic product (GDP) fell at a record pace in the last quarter of 2008 and U.S. factory orders slumped for the sixth straight month in January.
“You don’t have to go very far to pile up a big wad of bearish economic details,” said Tim Evans, energy analyst for Citi Futures Perspective in New York.
Oil prices have dropped more than $100 a barrel since last July as the economic crisis triggers the first decline in global energy use in a quarter century.
Oil prices had risen 9 percent on Wednesday after U.S. data showed a surprise decline in crude inventories, and expectations that stockpiles may continue to decline due to OPEC cuts limited losses Thursday.
Oil prices also gained some support from remarks by China’s Premier Wen Jiabao that the No. 2 oil consumer would achieve 8 percent growth this year — a level considered key to maintain employment growth.
OPEC nations have agreed to cut oil output by some 4.2 million barrels per day since September and will meet March 15 in Vienna to discuss whether deeper cuts are needed.
A Reuters survey found OPEC members had already met at least 81 percent of their current output reduction target.
Angola, which currently holds the presidency of the 12-member group, will not advocate further production cuts when the group meets, OPEC sources said on Wednesday.
But Venezuela, Algeria and Libya have raised the possibility of a further cut.
Additional reporting by David Sheppard in London; editing by Jim Marshall