* Oil falls below $35, extending day-ago losses
* Asian stocks track Wall St falls on Western bank fears
* Goldman says prefers equities to direct commods exposure
* U.S. crude inventories to rise for eighth week
(Updates prices, adds Goldman note on commodities investment)
By Chua Baizhen
SINGAPORE, Feb 18 (Reuters) - U.S. oil prices slid towards
$34 a barrel on Wednesday, extending losses of nearly 7 percent
a day earlier on fresh concerns over the economy and sliding
oil demand, which has caused inventories to bloat.
Global markets were roiled by fear that Eastern Europe's
battered economies would drag down Western banks, while oil
traders braced for an eighth consecutive rise in weekly U.S.
crude oil stock data. []
U.S. crude <CLc1> for March delivery, which expires on
Friday, fell 44 cents, or 1.3 percent, to $34.49 a barrel at
0638 GMT, while London Brent crude <LCOc1> for April delivery
fell 53 cents to $40.50 a barrel.
With the expiry of the March contract just days away, the
April <CLc2> contract has fallen even faster than the front
month, narrowing the gap to around $3.60 on Wednesday versus
nearly $8 last week <CL-1=R>, suggesting traders believe the
swollen stocks in Cushing, Oklahoma, may persist.
"The pessimistic macro tone that has been evident in equity
markets has been reflected in the energies complex," said Toby
Hassall, chief analyst at Commodity Warrants Australia.
U.S. stocks slid within striking distance of the November
bear-market low on Tuesday, with financial shares sinking to
14-year lows after Moody's Investors Service said banks could
be hit by the recession in Eastern Europe. []
In Asia on Wednesday, Japan's Nikkei stock average <>
fell 1.5 percent to its lowest close in nearly four months.
[]
The financial crisis has left much of the world in
recession and hammered oil consumption, pulling crude prices
from record highs above $147 a barrel hit in July.
"An imminent recovery in crude oil prices appears unlikely
as weak global demand remains a weight on the market," Hassall
said.
But Goldman Sachs said in a note that commodities markets
were beginning to show signs of bottoming, even though it
advised against direct investment in the asset class due to
hefty costs involved in holding positions.
"Unlike an equity, which an investor can buy and hold, a
long investment in a commodity cannot be held indefinitely," it
said. The bank remains bullish on the long-term outlook for
commodities. []
U.S. crude oil inventories likely rose for the eighth
straight time last week to near an 11-year high, a Reuters poll
of analysts showed, with crude stocks seen rising by 2.6
million barrels while gasoline and distillate stocks fell.
[]
The forecasts were issued ahead of data to be released by
the American Petroleum Institute later on Wednesday and by the
U.S. Energy Information Administration on Thursday. Both
reports were delayed a day by the U.S. Presidents' Day holiday
this week.
Traders will also watch for data later in the day on U.S.
housing starts as well as industrial production for January,
and the Redbook retail sales index for February, for fresh
indications on the state of health of the world's top economy.
(Additional reporting by Dharmasari Haroun, Editing by Ben
Tan)
