Oil near $41 as US crude workers may strike
Oil prices slipped to near $41 a barrel on Monday in Asia as investors weighed the threat of an oil worker strike in the US against the prospect of more bad economic news this week.business Updated: Feb 03, 2009 02:46 IST
Oil prices slipped to near $41 a barrel on Monday in Asia as investors weighed the threat of an oil worker strike in the US against the prospect of more bad economic news this week. Light, sweet crude for March delivery fell 48 cents to $41.20 a barrel by midafternoon in Singapore in electronic trading on the New York Mercantile Exchange. On Friday, the contract rose 24 cents to settle at $41.68.
Negotiations over wage increases continued over the weekend, with some 24,000 refinery workers agreeing to postpone a strike for at least a day. The United Steelworkers agreed to a rolling 24-hour extension of talks.
Workers plan to show up for scheduled shifts Monday, though a strike would affect 60 refineries. The US's biggest refiner, Valero Energy Corp, said it would shut down some facilities if workers walk out, as did European oil company BP PLC. "The threat of an oil workers union strike is helping support prices in the short-term," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "If refineries shut down, prices for crude products will go higher."
After a year when oil prices soared to a record near $150 a barrel in July only to collapse to $33 in December, crude has traded in the low $40s for the last week or so as investors eye weakening crude demand matching OPEC production cuts.
The Organization of Petroleum Exporting Countries has promised to slash output by 4.2 million barrels since September, and officials have suggested the group may reduce quotas again soon. Saudi Arabia, OPEC's biggest exporter, has led the production drop.
"OPEC producers seem to have a rather high level of compliance with the cuts, especially Saudi Arabia," Shum said. Investors will be watching closely for signs of slowing consumer demand from a slew of US economic numbers released this week. Friday's January employment report while data on home sales, manufacturing, factory orders, and the services sector come out throughout the week.
Cisco Systems Inc and Time Warner Inc are also set to report quarterly results this week.
"I expect those numbers will be rather bleak," Shum said. "The economic data will continue to put downward pressure on oil." In other Nymex trading, gasoline futures fell 0.96 cent to $1.26 a gallon. Heating oil dropped 0.40 cent to $1.43 a gallon while natural gas for March delivery slid 0.94 cent to $4.32 per 1,000 cubic feet.
In London, the March Brent contract fell 14 cents to $45.74 on the ICE Futures exchange.