Wednesday, January 7, 2009

Oil drops nearly $1 on economic gloom - 1

US crude for February delivery fell 93 cents to settle at $41.70 a barrel, while London Brent crude fell 97 cents to $44.89 a barrel.

Oil prices have dropped more than $100 a barrel since July as a global financial crisis has cut consumer and business energy demand, threatening to shrink total world oil usage for the first time in 25 years.

A US government report on Thursday showed the number of people remaining on jobless rolls last week rose to a 26-year high, even as new claims for unemployment benefits slipped.

Adding to the economic gloom, Wal-Mart Stores Inc, which accounts for a 10th of US retail spending, reported a disappointing sales performance in December and cut its earnings outlook.

Oil prices tumbled on Wednesday after the US Energy Information Administration's weekly report showed crude stocks rose last week by 6.7 million barrels, more than seven times the 900,000-barrel increase analysts had expected.

"Brent is done going under $40, but WTI (US crude) is a different animal altogether ... crude stocks in the Midwest are very high because Cushing is a landlocked base with pipes that only go in one direction," Christopher Bellew of Bache Financial said.

Ref: dailyinquire

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