(Updates prices)
By Jane Merriman
LONDON, Feb 5 (Reuters) - Oil fell more than a dollar on
Tuesday, pressured by fund selling in response to concerns over
an economic slowdown in top energy consumer the United States
that could dampen demand for oil.
U.S. light crude for March delivery <CLc1> fell $1.48 to
$88.54 a barrel by 1400 GMT, after a gain on Monday of $1.06.
London Brent crude <LCOc1> fell $1.46 cents to $89.01.
A series of bullish factors helped oil prices advance above
$90 a barrel on Monday, including shipping delays into the
United States caused by fog in the Houston Ship Channel, attacks
by Turkey on northern Iraq and an armed raid by militants on an
oil pipeline hub in Nigeria.
But these ultimately did not outweigh worries about the
broader economic outlook.
"It's pressure from fund liquidation brought on by the
bearish economic fundamentals that could mean lower demand for
oil," said Christopher Bellew, senior vice president at Bache
Commodities.
Equity markets in Europe came under pressure from concerns
that the six-month old credit market crisis has begun to affect
the wider economy, including consumer and service sectors.
Gold, which has benefited from turmoil in the equity
markets, was also under pressure, falling more than 1 percent,
as profit taking kicked in after last week's all-time high.
PRICE CURVE
Oil reached a record of $100.09 a barrel on Jan. 3, partly
due to expectations that oil supplies will struggle to keep pace
in the long-term with demand from high growth economies such as
India and China.
Prices are now around $10 below those highs, largely because
of fears of a recession in the United States that could mean
lower oil consumption.
But some analysts say shifts in the oil price curve, which
projects the price into the future, suggest a U.S. recession may
already be discounted.
"The last fortnight has seen a sharp adjustment (in the
curve) with the front end moving down, but with the long end of
the curve flattening and in fact rising 30 months out," Citi oil
analysts said in a research report.
"The suggestion is that the oil market sees limited downside
risk to prices from the increasingly-discounted (first half year
2008) U.S. recession."
Fog that halted ships serving big oil refineries in parts of
Texas and Louisiana on Sunday lifted for a few hours, letting
some ships move in. But dense fog was again causing delays early
on Tuesday. []
"The market is also looking at the lower refinery run rates
and thinking that crude demand is going to fall because the U.S.
has passed the peak winter demand," said Mark Pervan, a senior
resource analyst at the Australia & New Zealand (ANZ) Bank.
Expectations that U.S. crude inventories will likely rise
for the fourth consecutive week were also weighing on prices,
analysts said.
Data from the U.S. Energy Information Administration (EIA),
due on Wednesday, is expected to show a 2.2 million-barrel build
in crude stocks, a 2.1 million-barrel decline in distillates and
a 1.9 million-barrel increase in gasoline inventories, a Reuters
preliminary poll of analysts showed. [].
The Organization of the Petroleum Exporting Countries agreed
in Vienna last Friday to leave output unchanged for now.
(Additional reporting by Fayen Wong in Sydney; editing by James
Jukwey)
