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Oil price nudges above $34 again Oil price falls on Opec warning
(about 2 hours later)
Oil prices have risen to above $34 a barrel despite concerns about weakness in the US economy, which continue to cast a shadow over the commodity. Oil prices have dipped below $34 as oil producers' cartel Opec warned that demand will fall this year.
Analysts fear rising US unemployment will hit demand for oil. Opec forecasts that demand will fall by 0.67% in 2009. In the past few days, prices have been hit by fears rising US unemployment would hit demand.
The global slowdown has seen oil prices fall more than $110 off the highs seen in July last year.The global slowdown has seen oil prices fall more than $110 off the highs seen in July last year.
US light, sweet crude rose 80 cents to $34.78 a barrel, having tumbled $1.96 in New York to $33.98. London Brent for April rose 31 cents to $46.34. US light, sweet crude fell 10 cents to $33.88 on the Opec news, having earlier risen 80 cents to $34.78 a barrel.
"The economic indicators in the developed world remain weak and that's impinging on oil demand," said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. Opec now forecasts that global oil demand will fall by 580,000 barrels a day to average 85.13 million barrels a day. It had earlier forecast that demand would fall by 180,000 barrels a day.
"It's premature to say the fall in demand has bottomed." "World oil demand continues its steep decline from last year and is expected to follow this strong negative pattern at least for the first three quarters of the year," the oil producers' cartel said in its February report.
Oil demand in industrialised countries "is experiencing a steep decline resulting from the region's economic depression," the cartel said.
Weak demandWeak demand
Earlier this week, the Energy Information Administration reported a seventh consecutive weekly increase in nationwide crude oil stocks as the economic crisis crushed business and consumer demand for fuel.Earlier this week, the Energy Information Administration reported a seventh consecutive weekly increase in nationwide crude oil stocks as the economic crisis crushed business and consumer demand for fuel.
And rising unemployment has led to further fears of weakening demand for oil among US consumers.And rising unemployment has led to further fears of weakening demand for oil among US consumers.
New claims for unemployment benefit remain close to record highs.New claims for unemployment benefit remain close to record highs.
The US jobless rate rose to 7.6% in January, up from 7.2% in December, according to official figures - the highest level since 1992.The US jobless rate rose to 7.6% in January, up from 7.2% in December, according to official figures - the highest level since 1992.
The rapid rise in unemployment suggests the US recession is deepening.The rapid rise in unemployment suggests the US recession is deepening.
Members of both houses of Congress have agreed a stimulus package, now worth $789bn (£549bn), including tax cuts and spending aimed at rescuing the US economy.Members of both houses of Congress have agreed a stimulus package, now worth $789bn (£549bn), including tax cuts and spending aimed at rescuing the US economy.
But analysts have questioned how much the oil price will benefit from it, with reduced production more likely to raise prices. But analysts have questioned how much the oil price will benefit from it.
"We're at the point where you start to see marginal producers have to shut down production," said Peter Elston, a strategist with Aberdeen, a fund manager in Singapore.
"That gives you quite good support for prices."