Oil Sets 6-Week Low Then Cuts Losses Before Weekend
Oil prices fell on Friday amid concerns about a slowdown in U.S. economic growth.
The losses followed small early gains after the Organization of Petroleum Exporting Countries decided on Thursday, as expected, to keep existing supply limits in place.
U.S. crude settled 44 cents weaker at $57.11 a barrel. It was the lowest level for the front month contract since January 30. Just before the end of open outcry trading, oil sank to a 6-week intraday low of $56.17.
London Brent crude fell 38 cents to $60.30 a barrel. Brent has risen to trade at a premium over U.S. crude because of production disruptions in Nigeria and a firm North Sea market.
Oil prices have been under pressure as troubles in the U.S. housing finance sector have heightened fears in world stock markets about the health of the economy in the United States, the world's biggest oil consumer.
Investors are worried that a rising number of mortgage defaults by higher-risk borrowers in the United States could hit the broader financial sector and consumer confidence.
U.S. stocks slipped on Friday, led by lower shares in major investment banks and home builders.
"There's a big cloud in the sky. The question mark is about the U.S. economy and concerns over the housing industry because that will have a big impact on consumer demand, which may affect oil consumption," said Andrew Harrington, an analyst at ANZ Bank.
OPEC had been widely expected to make no change to supply curbs at its meeting in Vienna on Thursday. But analysts said the OPEC decision to meet next in September, rather than in June, could be supportive to prices.
Olivier Jakob of oil consultants Petromatrix said OPEC could always call an emergency meeting, if needed, but, in the meantime, there would be nothing until after the summer, traditionally the peak demand season for gasoline.
OPEC, which pumps more than a third of the world's oil, shares concerns about the U.S. economy.
"We are watching developments on world stock markets, to assess their possible impact on the global economy and, in particular, on energy demand," said OPEC President Mohammed bin Dhaen al-Hamli, the United Arab Emirates' oil minister.
OPEC had already agreed to cuts totaling 1.7 million barrels per day at two previous meetings. The cuts followed oil's retreat from a peak in July and helped prices to recover from a 20-month low of $49.90 on Jan. 18.
OPEC's supply curbs have helped to balance supply and demand. Gasoline stocks, for example, have been falling in the United States since early February.
But the International Energy Agency, which advises 26 industrial countries, predicted this week that the world would need more OPEC oil.
The IEA estimated oil stocks in industrial countries could be heading for the largest first-quarter drawdown in more than a decade.