Oil stayed below $42 a barrel today, after falling nearly 2 per cent overnight, weighed down by another round of grim US economic data reflecting faltering demand in the world's top energy consumer.
Investors will focus on the release of advance fourth-quarter gross domestic product data due later in the day for more clues on the outlook of the US economy.
By 7.05am, US crude was up 15 cents a barrel at $41.59, off an intraday low of $41.31, while London Brent crude gained 10 cents to $45.50.
Oil has fallen nearly 11 per cent over the past week and is down 6.8 per cent from December, which would be its best performance since end-August.
Oil sank 1.7 per cent on Thursday after reports underscored a deepening recession in the United States. The jobless rate rose to a record peak in January, while in December sales of new US single-family homes fell to the lowest level ever and new orders for durable long-lasting manufactured goods tumbled for a fifth month.
Shrinking demand for fuel has also contributed to the biggest four-month build-up in US crude stockpiles since 1990.
"The risk is still clearly on the downside. The economic data is going to confirm that things are still slowing down," said Mark Pervan, senior commodity strategist at ANZ Bank in Melbourne.
"Oil's big Achilles heel is the US market, and that's going to continue to weigh on prices."
All eyes will be trained on the government's first snapshot of the US economy in the fourth quarter, due at 1.30pm, which will show it at its weakest in 26 years.
The dismal forecast comes atop the International Monetary Fund's projection on Wednesday that world economic growth this year will fall to its slowest since World War Two.
Unemployment in Germany, Europe's largest economy, rose nearly twice as much as expected in January.
Asia's outlook was equally bleak. Data showed unemployment in Japan at a near three-year high and industrial output plunging by a record 10 per cent last month, reinforcing expectations of a unprecedented contraction in the world's second-largest economy.
Reuters