(Recasts, updates prices, market activity to settlement)
By Matthew Robinson
NEW YORK, Feb 21 (Reuters) - Oil tumbled more than $1 on
Thursday, backing further off the record over $101 hit this
week, as U.S. economic concerns and growing inventories offset
expectations OPEC could cut output when it meets next month.
U.S. crude futures for April delivery <CLc1> settled down
$1.47 at $98.23 a barrel, after the March futures contract hit
a record of $101.32 a barrel before expiring on Wednesday.
London Brent <LCOc1> settled $2.18 lower at $96.24.
New data showing a slumping U.S. economy pressured stock
markets and encouraged oil traders to take profits from record
highs.
The Philadelphia Federal Reserve Bank reported 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 last week in the world's top
consumer, 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 northern hemisphere winter ends, he said, adding that
customers had requested less oil for March.
But the International Energy Agency, which advises
industrialized countries on energy matters, has urged OPEC to
at least keep oil production levels unchanged to rebuild low
crude stocks.
LOOKING FOR A CORRECTION
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
have turned 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.
(Additional reporting by Gene Ramos in New York, Jane Merriman
in London and Chua Baizhen in Singapore; Editing by David
Gregorio)
