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Oil weak as demand fears remain Oil weak as demand fears remain
(about 3 hours later)
The price of oil has fallen for a third day, hovering just above $49 a barrel, as a drop in US retail sales renewed fears about falling demand. The price of oil remains weak, hovering just above $50 a barrel, after a drop in US retail sales renewed fears about falling demand.
US light crude was down six cents at $49.35, with Brent oil down 17 cents at $51.79 in early European trade. US light crude was up 64 cents at $50.05 a barrel, having traded at about $49 after three days of falls. Brent oil rose 49 cents to $52.45 a barrel.
Prices are also subdued by fears that US inventories will continue to rise.Prices are also subdued by fears that US inventories will continue to rise.
Oil prices have slumped since hitting a record high of more than $147 a barrel in July last year, dropping below $40 late last year. Oil prices have slumped since hitting a record high of more than $147 a barrel in July last year.
Prices dropped below $40 a barrel late last year.
Demand dragDemand drag
Retail sales dropped 1.1% in March in the US, according to a US government report released on Tuesday.Retail sales dropped 1.1% in March in the US, according to a US government report released on Tuesday.
"Crude fell on the back of weaker-than-expected March retail sales, which also dragged on equities, and the main worry is still the large weekly increase in crude inventories," said Peter McGuire, managing director of Commodity Warrants Australia."Crude fell on the back of weaker-than-expected March retail sales, which also dragged on equities, and the main worry is still the large weekly increase in crude inventories," said Peter McGuire, managing director of Commodity Warrants Australia.
There is as yet little sign that demand is picking up, said Ben Westmore, energy analyst with National Australia Bank. "Demand will have to come back before you see the oil price move up from $50 in a sustained way," he added.There is as yet little sign that demand is picking up, said Ben Westmore, energy analyst with National Australia Bank. "Demand will have to come back before you see the oil price move up from $50 in a sustained way," he added.
Last week, the International Energy Agency predicted that the global recession would cut demand for crude this year, with world oil demand falling by 2.4 million barrels a day to 83.4 million barrels.Last week, the International Energy Agency predicted that the global recession would cut demand for crude this year, with world oil demand falling by 2.4 million barrels a day to 83.4 million barrels.
Separately, Mexico's state-owned oil company Pemex has unveiled plans to built its first new refinery in 30 years. The $9.1bn (£6.1bn) refinery is expected to come online in 2015.Separately, Mexico's state-owned oil company Pemex has unveiled plans to built its first new refinery in 30 years. The $9.1bn (£6.1bn) refinery is expected to come online in 2015.
Even though Mexico is the world's sixth-biggest oil producer, it relies on US refineries to process a lot of its crude.Even though Mexico is the world's sixth-biggest oil producer, it relies on US refineries to process a lot of its crude.