Oil Rises Towards $91 after Dip on Economy Concern
Oil rose almost $1 to above $90 a barrel on Friday, staging a limited recovery after falling sharply this week on concern the United States would slip into recession and erode demand in the world's top consumer.
Crude is down over 9 percent from a record high of $100.09 reached on Jan. 3, reducing the chance that the Organization of the Petroleum Exporting Countries will raise output when it meets on Feb. 1.
"I would expect to see some more move to the upside after the dip this week," said Kevin Blemkin, an oil trader at MF Global who added that the outlook for the U.S. economy may still dampen prices.
"With the prospects for the economy looking rather bleak, you'd assume demand would fall off."
U.S. light, sweet crude rose, after earlier slipping to $89.61. London Brent crude for March gained.
Oil's bounce came alongside gains in European stocks and analysts that said an usually close link between price moves in oil and U.S. stocks on Thursday suggested crude may take its cue from U.S. equities.
"The extremely high correlation seen yesterday between the Dow and oil needs to be taken as a new risk factor," said Olivier Jakob at Petromatrix. "Developments on Wall Street to be watched closer than ever."
Oil could be distorted on Friday in the run-up to the February contract's expiry on Tuesday. NYMEX and other U.S. financial markets are closed on Monday to mark the Martin Luther King holiday.
OPEC reacted coolly this week to a call from U.S. President George W. Bush for more oil supplies to bring down prices and ease strain on the economy.
The group's president, Chakib Khelil, said there was no reason to raise output if oil inventories recover in the second quarter when global consumption normally slows as winter ends in the Northern Hemisphere.
U.S. Federal Reserve Chairman Ben Bernanke said on Thursday more interest rate cuts may be necessary to counter the worsening economic outlook, but said the Fed has not forecast a recession.