(Updates prices with settlements)
By Richard Valdmanis
NEW YORK, Jan 10 (Reuters) - Oil prices tumbled 2 percent on
Thursday, falling farther below last week's $100 peak, as
concerns about a global economic slowdown raised the possibility
of weakening energy demand.
U.S. crude <CLc1> settled down $1.96 at $93.71 a barrel by
1928 GMT, adding to a slide from its peak above $100 hit Jan. 3.
London Brent crude <LCOc1> shed $2.15 to settle at $92.22.
Fears that the U.S. economy could slip into a recession in
the fallout of a housing slowdown and credit crunch have grown
over recent weeks, and experts see the risk growing of a global
economic slowdown as well.
"Fears over weakening oil demand seem to be outweighing
concerns over supply," MF Global analysts said in a note.
U.S. Federal Reserve Chairman Ben Bernanke on Thursday
raised expectations that Fed policy-makers would make further
interest rate cuts to combat the U.S. economic slowdown,
tempering oil's losses and giving stock markets a boost.
"In light of recent changes in the outlook for, and the
risks to, growth, additional policy easing may be necessary,"
Bernanke said in prepared remarks.
Investment bank Goldman Sachs said on Wednesday it expected
the world's biggest economy to tip into recession this year.
Former U.S. Treasury Secretary Larry Summers added his voice to
the chorus on Thursday, saying the chance of a U.S. recession
was more than 50 percent.
"I believe to an abnormal extent that the U.S. and global
economies are at an inflexion point, with higher risk of
recession than ever before this century," he told an investor
conference in Oslo.
Oil was also under pressure after a report by the U.S.
government Wednesday showed a rise in fuel stocks in the United
States, offsetting a steep decline in crude supplies.
Supplies of gasoline in the United States jumped 5.3 million
barrels and distillates rose 1.5 million barrels last week, far
exceeding analyst forecasts.
Analysts said the data from the U.S. Energy Information
Administration showed a build in stocks of diesel, mainly used
by the U.S. trucking and transport sector, which could be a
forewarning about a slowdown of the wider economy.
"One week does not make a trend, but, if diesel demand in
the U.S. starts to weaken, that to me is a warning for the
economy as well," said Mike Wittner, global head of oil research
at SG.
The U.S. EIA added that crude inventories tumbled 6.8
million barrels to the lowest level since October 2004. Low
stockpiles of raw crude in the United States were a key factor
behind oil's climb into the triple-digits last week.
The Organization of Petroleum Exporting Countries, which
supplies more than a third of the world's oil, is keeping a
close watch on the economy.
OPEC President Chakib Khelil said on Thursday he expected
demand and prices to be affected if the malaise reached global
proportions.
"We are closely following with interest the evolution of
this crisis, which could, if it comes to affect Europe and the
rest of the world, bring about a decline in the development of
the world economy," Khelil said.
(Additional reporting by Peg Mackey in London; editing by
Matthew Lewis)
