Oil extends decline on recession fears
Singapore, January 14, 2008
Oil fell on Monday, extending the past three sessions' decline, as the growing threat of a US economic downturn outweighed supply worries in Iran and Nigeria.
US light crude for February delivery fell 23 cents to $92.46 a barrel by 0106 GMT. US oil settled down $1.02 at $92.69 a barrel on Friday, dragged down by fears of a potential US economic recession.
"There was some bullish news out of Iran and Nigeria that could have pushed up oil prices, but Asian markets are focusing on the health of US economy for now," said Gerard Burg, a resource analyst at National Bank of Australia (NAB) in Melbourne.
US recession concerns were stoked by American Express Co's warning on Friday of mounting credit card defaults, and also dragged down Asian stocks on Monday.
Despite oil's slide in the past three sessions, analysts said geopolitical tensions in Iran and Nigeria would continue to lend support to prices.
US President George W Bush accused Iran on Sunday of threatening security around the world by backing militants and urged his Gulf Arab allies to confront the issue.
While Iran has agreed to answer remaining questions about its past nuclear activities within a month during talks with International Atomic Energy Agency, the war of words between the US and Iran has rekindled worries that Iran, the world's fourth-largest crude exporter, could cut oil exports to retaliate against US pressure on its nuclear programme.
In Nigeria, militants fighting for autonomy in the country's oil-producing south detonated a remote-controlled bomb on an oil tanker on Friday, causing a big fire.
It was the second rebel attack on Africa's largest oil industry in a week. Militant attacks since 2006 have knocked out a fifth of the country's oil output capacity.
"Violence in Nigeria is being overlooked for now, but if it persists, that could prop up oil prices," Burg said.
Analysts also said the lack of clear indication from Opec on whether it would raise output at its February 1 meeting would also keep prices firm.
Opec said on Sunday that oil prices had been driven to record highs by speculators rather than by any supply shortage, and the producer group was ready to boost output when the market needs more.
In a newspaper interview, Opec secretary-general Abdullah al-Badri also said a slowing global economy would not impact oil demand in the short term and lead to a price collapse. - Reuters