Oil falls toward US$48 on weak demand data

SINGAPORE – Oil dipped towards US$48 a barrel yesterday as data showing weak demand from major Asian consumers more than offset the euphoria over Wall Street gains and an unexpected fall in US crude stockpiles.

The American Petroleum Institute numbers released after the close of trade on Tuesday showed a fall in US crude stockpiles last week of one million barrels, raising some hopes that Energy Information Administration data yesterday could break the pattern of large stock builds.But demand for oil remains weak, with data from China, Japan and South Korea underscoring this trend, giving few reasons for traders to buy crude as prices neared the US$50 resistance level.US crude for June delivery fell 30 cents to US$48,25 a barrel, while London Brent crude fell 17 cents to US$49,65.Oil has fallen around US$100 a barrel since the record above US$147 hit in July last year, but has risen more than 40 per cent since mid-February, partly because of signs of compliance by Opec members over their agreed supply cuts.’The mood in the oil market is not good. It’s very tough for prices to go higher,’ said Ken Hasegawa, commodity sales manager with broker Newedge in Tokyo.Oil has been trading in a narrow band, with few convincing signs of a sustained demand recovery within sight.’At US$45, it’s fairly easy to make a long position. So it is a support level. On the other hand, at the moment nobody wants to buy at US$50,’ he said, adding that some traders were taking positions, with expectations that prices would end the year in the range of US$60-$70 a barrel.Comments from US Treasury Secretary Timothy Geithner that most US banks have adequate capital had soothed nerves that had been battered by a larger-than-expected writedown by America’s largest bank on Monday, which sent oil down nine per cent.Oil data for major Asian economies released yesterday showed crude imports for China fell 5,5 per cent, Japan imported 18,4 per cent less crude based on preliminary data, and South Korean imports fell 15 per cent. But giving support to sentiment, a senior Chinese central bank official said yesterday the world’s number three economy had hit the bottom in the final three months of 2008 and had showed positive signs of recovery in the first quarter.This contrasts with a European Central Bank official’s comments that the global economy was still in the midst of a sharp downturn, which came at a time of mixed signals from corporate results in the United States and elsewhere. -Nampa-Reuters