Crude edged down below $47 a barrel today ahead of Opec's meeting this weekend which pushed prices up by more than 11% in the previous session helped by better-than-expected economic data.
Easing some demand worries and pushing equities up, the US Commerce Department said yesterday that sales slipped 0.1% in February after a hefty 1.8% rise a month earlier, an unexpectedly small drop and a rare dose of good news for an economy trapped in a 14-month recession.
US light crude for April delivery fell 33 cents a barrel to $46.70 a barrel, having jumped $4.70 yesterday to settle at $47.03, erasing the previous two sessions' losses.
London Brent crude was 33 cents down at $44.76.
"The market is sitting on the fence ahead of the meeting. Prices were strong yesterday on the back of equity markets and will hold to these gains today, except if equities fall," said Mark Pervan, ANZ's senior commodities analyst.
"The market is pricing another cut. It could rise $4to $5 if Opec cuts again but the upside will not last. The economy is going to be the main draw."
Asian stock markets opened higher today, tracking the rally in US stocks, with Japan's Nikkei jumping by more than 4%.
China's economic data yesterday had also lent some hope, as a continued surge in bank lending in February spurred optimism that the economy would soon rebound, even if the country's industrial growth ground to a record low at the start of the year.
The market is eyeing Opec's meeting on Sunday, waiting to see if ministers will decide further cuts or call for stricter compliance, which seems to be the preferred option for influential member Saudi Arabia.
Crude has hovered between $33 and $50 since the beginning of the year, halting its slide from last July's records above $147 a barrel, after Opec agreed successive cuts for a total of 4.2 million barrels per day since September.
"All told, the advice for Opecologists this weekend is watch the flows, not the rhetoric. Oil is never far from political intrigue, but in the end fundamentals will prevail," JP Morgan said in its Oil Markets Weekly report.
Opec seaborne crude exports, excluding Angola and Ecuador, will fall to a five-year low in the four weeks to 28 March, to 22.76 bpd, down 350,000 bpd, UK consultancy Oil Movements said in its latest weekly estimate yesterday.
Potentially capping prices today, both Paris-based consumer watchdog the International Energy Agency and Opec will release monthly reports today, expected to show yet more downward revisions for crude demand this year.
Opec will slash its forecast for 2009 crude demand by one million barrels per day in its monthly report, the group's secretary general Abdullah al-Badri said on Monday.
The US Energy Department's forecasting arm on Tuesday was the first to revise down its monthly forecast, saying it expected world crude consumption to average 84.27 million barrels per day in 2009, down 430,000 bpd from its previous monthly forecast and the lowest level since 2005, reported Reuters.
Source: Wire Services
