Oil prices fell for the sixth session to a three-week low of around $77 a barrel today, as poor risk appetite and renewed concerns about energy demand prompted investors to sell down their positions.
A series of bearish news, such as the International Energy Agency cutting its global 2010 oil demand growth view, a strong US dollar, poor quarterly results from JPMorgan Chase & Co and expectations for reduced heating demand in the Northern Hemisphere, combined to cut oil prices by over 1.7 per cent on Friday.
"The oil market is seeing a spillover effect from Friday. The demand fundamentals remain weak and there also isn't going to be any economic data out of the US over the next couple of days that can change the prevailing bearish views," said Ben Westmore, a commodities analyst at the National Australia Bank.
US crude for February delivery fell 81 cents to $77.19 a barrel by 0144 GMT today, after having fallen to as low as $77.07 earlier.
London Brent crude fell 71 cents to $76.40.
Crude oil prices have steadily fallen since striking a 15-month intraday high of $83.95 a barrel on January 11th, dragged down by weak U.S. economic data and fears of a sluggish rebound in demand in the world's largest energy consumer.
Prices are now still 47 per cent below its lifetime high of more than $147 a barrel hit in July 2008.
"Oil prices are going to need a good dose of economic optimism before it can rebound to the $80 levels again," Mr Westmore said.
Asian stocks fell today, with Japan's Nikkei average declining 1.7 per cent to come off its 15-month high and South Korea's Kospi index opening down 0.33 per cent, as the deep fourth-quarter losses posted by JP Morgan raised concerns about the health of other banks.
Cold weather across major oil consuming countries has done little to boost demand, the International Energy Agency said on Friday in a report that trimmed its global demand growth forecast by 20,000 barrels per day.
On Opec rumblings, Qatar's oil minister said yesterday the market is "well-supplied", while Saudi Arabia's deputy oil minister reiterated that an oil price of between $70 to $80 a barrel was reasonable, adding that it was too early to predict the outcome of Opec's next meeting in March.
Separately, six major powers discussed on Saturday prospects of further sanctions against Iran over its nuclear program, but China made clear it opposed more punitive action at the moment, participants in the meeting said.
Traders say a raft of Chinese data this week, including fourth-quarter gross domestic product, retail sales and industrial production for December, could offer a lift to crude oil prices.
Investors will also watch US earnings for cues with IBM and Goldman Sachs due to report this week.
Reuters