Oil prices dip under 37 dlrs in New York

February 17, 2009 11:10:15 AM

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Oil prices rose slid on Monday with New York crude falling under 37 dollars a barrel as the market reacted to forecasts of weak energy demand made at the end of last week.

New York's main futures contract, light sweet crude for delivery in March, shed 71 cents to 36.80 dollars a barrel.

In London, Brent North Sea crude for April delivery reversed 99 cents to 43.82 dollars.

"Crude oil futures remain in the broad range, with... (New York crude) looking ready to test the 40 dollar per barrel area again, and Brent futures still holding near the technical support area at 44 dollars per barrel," said Sucden Financial analyst Brenda Sullivan.

"Volume is likely to remain light today as US markets are closed."

Trading on the floor of the New York Mercantile Exchange was shut on Monday owing to a public holiday in the United States, leaving investors able to trade only electronically.

The price differential between New York crude and Brent oil hit a record of more than 11 dollars last week, which analysts attributed to soaring energy stockpiles in the United States.

Last Friday meanwhile, the OPEC oil producers cartel trimmed its forecasts for global oil demand, forecasting that it would shrink by 0.67 percent in 2009 because of "economic depression" in industrialised countries.

Also last week, the International Energy Agency cut its forecast for global oil demand this year, but warned about a future supply crunch because of current low investment levels.

The energy watchdog for industrialized nations forecast that global oil demand would measure 84.7 million barrels per day (bpd) on average in 2009 -- 570,000 bpd less than its last forecast made in January.

At this level, demand would be 1.1 percent or 1.0 million bpd less than in 2008, when demand also fell compared with the year earlier.

Crude futures have in recent months slumped from record highs of above 147 dollars a barrel reached last July when concerns about supply disruptions had sent them rocketing.

Tony Nunan of Mitsubishi Corp's international petroleum business in Tokyo said last week's passage of the US stimulus measures was unlikely to provide much of a boost for oil prices because inventories were high and demand for crude lacklustre.

The US Congress has approved a 787-billion-dollar package of tax cuts and fresh spending, setting the stage for President Barack Obama to sign the measure into law before his self-imposed Monday deadline.

"Most people feel it's going to be a long, hard slog before we get any recovery in the economy," Nunan said.