(Updates prices, adds more U.S. economic data)
By Santosh Menon
LONDON, Feb 1 (Reuters) - Oil fell to around $90 a barrel on
Friday after mostly weak U.S. economic data triggered fresh
concerns of a recession in the world's top oil consumer,
overshadowing OPEC's decision not to raise output.
U.S. light crude for March delivery <CLc1> lost $1.70 to
$90.05 a barrel by 1635 GMT, off highs of $92.12. London Brent
crude <LCOc1> was $1.67 down at $90.54.
U.S. employers unexpectedly cut 17,000 non-farm jobs last
month, the first fall in nearly 4-1/2 years, providing further
evidence of a slowing economy. []
Construction spending in the United States fell by a
sharper-than-expected 1.1 percent in December, reflecting the
woes in the country's housing market, while data released by New
York-based independent forecaster Economic Cycle Research
Institute showed a very high risk of a U.S. recession.
The bearish economic data weighed on stocks and the U.S.
dollar, dragging down with them oil prices that had rallied
earlier in the session after OPEC decided to keep output levels
steady. []
"It will be extraordinarily difficult to dispel ideas the
economy is not headed into a recession... General economic
slowing appears to be taking place just as crude oil stocks have
begun seasonal rebuilding," said Mike Fitzpatrick at MF Global.
OPEC ministers meeting in Vienna once again rejected calls
from consumer countries to pump more oil amid worries that high
fuel prices are adding to recessionary pressures in the West.
[]
CALLS FOR CUT
The decision was widely expected, with a chorus of ministers
reiterating ahead of the meeting that the oil market was well
supplied, and a small group -- Iran and Venezuela -- even
calling for a production cut at their next gathering on March 5.
Analysts said OPEC appeared keen not to repeat its
experience of 1997 when it boosted supplies ahead of an economic
slowdown and prices collapsed to $10 a barrel.
"I absolutely expect them to consider cutting output in
March... To me the only question is will it be a formal cut
or...just cut informally," said Mike Wittner, oil analyst at
Societe Generale.
"A lot depends of the price itself. If prices drop another
$10 it's easier for them to have a formal cut."
Simon Wardell, analyst at Global Insight said OPEC could
decide next month to cut output by as much as 750,000 barrels
per day from April 1.
OPEC's decision comes as concerns mount the United States is
headed for a recession after recent economic data pointed to a
deteriorating economy. A major U.S. recession could affect the
world economy and with it oil demand and prices.
"OPEC will not see their roles as defending economic growth
but as that of providing a stable flow of oil at a fair price,"
said Robin Batchelor, managing director at BlackRock Merrill
Lynch Investment Managers.
A gloomy outlook for the U.S. economy has sent many
speculative investors, who helped propel oil's rally above $100
a barrel last month, into safer havens.
The U.S. Federal Reserve has sought to ward off a recession
by a series of interest rate cuts. It has cut rates by 125 basis
points in two tranches in the last nine days.
(Additional reporting by Felicia Loo in Singapore; editing by
Anthony Barker)
