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Oil prices rise in Asia from near four-year lows

Oil prices rose in Asia from near four-year lows on Friday but analysts said prices were likely to fall even further as economic data signalled a global economic downturn may be deep and prolonged, analysts said.

business Updated: Dec 06, 2008 08:23 IST

Oil prices rose in Asia from near four-year lows on Friday but analysts said prices were likely to fall even further as economic data signalled a global economic downturn may be deep and prolonged, analysts said.

In afternoon trade New York's main futures contract, light sweet crude for January delivery, rose 39 cents to 44.06 dollars a barrel -- off a low of 43.39 -- after dropping 3.12 dollars to 43.67 on the New York Mercantile Exchange Thursday. That was the lowest price since January 2005.

Brent North Sea crude for January gained 33 cents to 42.61 dollars a barrel, slightly off its morning low of 42.13. The contract fell 3.16 dollars to 42.28, also the lowest level since January 2005, on Thursday in London.

It is "way, way premature" to think that the market has hit bottom, said David Moore, a commodities strategist with the Commonwealth Bank of Australia in Sydney.

"The focus is well and truly on the weakness in consumption, and that doesn't seem likely to go away in the next 24 hours." Oil prices have lost more than two-thirds of their value since striking record highs above 147 dollars in July, pulled down by a widening global economic slowdown that weighs on demand, analysts say.

Moore said a US report on unemployment, due out later Friday, could re-emphasise the focus on bad economic news and resultant lower demand for energy.

The key November non-farm payrolls and unemployment report is expected to show the loss of 325,000 jobs in the United States, the world's largest economy and biggest energy consumer.

The US, European Union, Japan and other economies are already in recession, and investors are worried about an increasingly marked decline in demand among the industrialised countries, and a slowdown in emerging countries such as China.

"Fears of a prolonged global recession continued to weigh on sentiment," said Sucden analyst Nimit Khamar in London.

The jittery market shrugged off sharp interest rate cuts Thursday by four central banks in Europe, including the European Central Bank and Bank of England, dealers said. The cuts were aimed at reversing the economic downturn.

Wall Street bank Merrill Lynch forecast crude oil could fall to 30 dollars a barrel in New York if the global recession extends to China and OPEC fails to cut back production to meet slowing demand.

The Organisation of the Petroleum Exporting Countries (OPEC), which pumps about 40 percent of the world's crude, is to meet on December 17.

Moore said a cut in production is likely at the meeting, and could help spark some recovery in oil prices.