(Updates prices, adds comments on stock market)
NEW YORK, Feb 21 (Reuters) - Oil tumbled nearly $2 on
Thursday as U.S. economic concerns and growing inventories
offset expectations OPEC could cut output when it meets next
month.
U.S. crude for April delivery <CLc1> fell $1.86 to $97.84 a
barrel by 1:53 p.m. EST (1853 GMT), after the March contract
hit a record of $101.32 a barrel before expiring on Wednesday.
London Brent <LCOc1> traded $2.32 lower at $96.10.
New data showing the U.S. economy in a downtrend pressured
stock markets, and encouraged oil traders to take profits from
record highs.
The Philadelphia Federal Reserve Bank showed a sharp
pullback in Mid-Atlantic manufacturing activity, while another
report showed leading economic indicators fell 0.1 percent in
January for a fourth straight monthly decline.
"The equity markets are weakening and the energy markets
are following. Wall Street was able to shrug off some dismal
economic data in the past two days but not today," said Jim
Ritterbusch, president of Ritterbusch & Associates.
U.S. government data showed a sharp 4.2 million barrel
build in crude stockpiles in the world's top consumer last
week, nearly double analyst forecasts. Gasoline stocks swelled
to 14-year highs and distillate inventories fell. []
"Overall, the numbers have a bearish tilt, which should
increase the emphasis on the OPEC meeting in March with regards
to production cuts that some in the marketplace are
anticipating," said Chris Jarvis, senior analyst at Caprock
Risk Management, New Hampshire.
Comments by OPEC ministers that the group could hold or
even reduce output at a March 5 meeting helped send oil on the
record rally approaching the inflation-adjusted high of $102.53
hit in April 1980, a year after the Iranian revolution.
"We will not just react to $100 oil," Qatar's oil minister,
Abdullah al-Attiyah, told Reuters on Thursday. "OPEC will move
when it sees physical demand for its oil." []
Oil demand should fall seasonally in the second quarter as
the winter ends, he said, adding customers had requested less
oil for March.
But the International Energy Agency, which advises
industrialized countries on energy matters, has urged OPEC to
at very least keep oil production levels unchanged to rebuild
low crude stocks.
BETTING SHORT
Legendary Oil investor T. Boone Pickens said on Thursday he
has a short position on oil and natural gas on expectations
that prices will fall in the near term, and analysts said
fundamentals may no longer support triple-digit oil.
"More and more people are of the view that crude at $100 is
overpriced and simply far detached from market fundamentals,"
said Ritterbusch.
"In the energy markets, people are taking profits from long
positions established in the past two weeks."
Speculative investment has grown in recent weeks as funds
turn to commodities to hedge against inflation, pushing prices
to average $93.02 a barrel this year, up nearly a third on the
2007 average of $72.30.
(Reporting by Matthew Robinson and Gene Ramos in New York, and
Jane Merriman in London, Chua Baizhen in Singapore)
