(Updates throughout, changes dateline from LONDON)
By Matthew Robinson
NEW YORK, Jan 16 (Reuters) - Oil fell 2 percent on Wednesday
on a sharp build in U.S. crude stocks and rising concerns
economic problems could erode fuel demand in the world's top
energy consumer.
U.S. crude <CLc1> traded down $1.88 to $90.02 a barrel by
1734 GMT after hitting $89.26, the lowest level since Dec. 18.
London Brent crude <LCOc1> fell $1.70 to $89.28 a barrel.
U.S. crude stocks swelled 4.3 million barrels to 287.1
million barrels in the week to Jan. 11, the first build in nine
weeks and above analysts' forecasts for a 600,000 barrel rise,
U.S. Energy Information Administration data showed.[]
"The latest EIA data confirm the weakening trend in demand
and will keep the market bearish in combination with
recessionary fears that have hit all financial markets," said
Tom Knight, trader with Truman Arnold.
U.S. crude futures have fallen from a record high above $100
hit earlier this month on concerns a potential U.S. recession
could hurt demand growth, pushing analysts to revise their
consumption forecasts.
The International Energy Agency, adviser to industrialized
countries, on Wednesday cut its 2008 global demand growth
forecast by 130,000 barrels per day to 1.98 million bpd and said
it may lower the figure further.
"We have seen some negative studies on the macroeconomic
front, and the IEA report this morning is moderately bearish,"
said Mike Wittner, head of oil research at Societe Generale.
"Looking forward, I think prices are going to fall further.
Essentially, the market seems to be balanced in the first
quarter this year."
The IEA also warned, however, that oil inventories in member
countries of the Organization for Economic Co-operation and
Development had fallen to the lowest point in more than four
years.
"The oil market has tightened. There's no doubt about that,"
said Lawrence Eagles, head of the IEA's Oil Industry and Markets
division. "In terms of forward cover, we're at the lowest since
November 2003."
U.S. President George W. Bush called upon oil cartel OPEC to
hike output to help lower prices during a trip to the Middle
East this week.
OPEC officials say factors beyond their control sent oil on
its record run to triple digits, and Qatar on Wednesday said the
producer group did not have to hike output when it meets again
in February.
"I don't think the market needs more oil," Qatari Oil
Minister Abdullah al-Attiyah, told Reuters.
Saudi Arabia, the world's top oil exporter, vowed on Tuesday
to boost output when the market needed more, although Saudi Oil
Minister Ali al-Naimi did not say whether OPEC would do so at
its meeting in Vienna.
(Reporting by Matthew Robinson in New York; Maryelle Demongeot
in Singapore; Ikuko Kao and Alex Lawler in London, editing by
Matthew Lewis)
