U.S. crude oil for August delivery fell 49 cents to $61.05 a barrel by 1745 GMT after hitting a low of $60.29 a barrel. London Brent crude slipped 43 cents to $62.66 ahead of the August contract’s expiry later on Thursday.

The losses come amid lingering worries about global energy demand, contracting for the first time in a quarter century under the weight of the economic recession.

The global slowdown has cut world oil demand by as much as 2.5 million barrels per day, according to the International Energy Agency.

Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois, added that recent government data showing increases in U.S. refined fuel supplies added to bearish sentiment in the oil market.

The U.S. Energy Information Administration said on Wednesday that gasoline and distillate supplies rose last week despite increased domestic refining activity, while crude inventories dipped more than expected.

Oil’s losses were limited by news that China, the world’s second largest energy consumer, saw surprisingly strong growth of 7.9 percent in the second quarter, fuelled by state spending and bank lending.

In the United States, data showed new jobless claims fell to their lowest level since January, but the Labor Department was keen to emphasise an unusual pattern in automotive layoffs had amplified the drop.

JPMorgan and Chase & Co reported a 36 percent rise in quarterly profit, topping Wall Street forecasts. But the bank warned that credit quality in consumer mortgages and credit cards was deteriorating faster than expected.

Also highlighting the ongoing problems facing the world economy is the looming bankruptcy of CIT Group Inc , a lender to hundreds of thousands of small and mid-sized U.S. businesses, after bailout talks with the U.S. government fell apart.

LONDON, July 16 (Reuters)

Saudi Arabia’s oil minister, Ali Naimi, has indicated that while demand is beginning to pick up, inventories remain dangerously high. Therefore, it would be best for the cartel to “stay its course” by continuing to adhere to previous production cuts until demand stabilizes.

After soaring above $147 a barrel last summer the price of oil tumbled more than 80% to a four-year low of $32.70 a barrel in February. To combat the sharp decline in prices, OPEC has lowered its production quotas by 4.2 million barrels per day (bpd) – about 5% of global demand – since September.

Since February, oil prices have recovered, climbing to their current level above $60 a barrel. But both Naimi and industry analysts have warned that the rally has more to do with market sentiment and the potential for a recovery than it does fundamentals.

“The price rise is a function of optimism that better things are coming in the future,” Naimi told reporters earlier this week.

The International Energy Agency (IEA) estimates global oil consumption will fall by 2.6 million bpd this year. That would be the biggest drop since 1981.

Naimi says that world crude inventories – at current levels – would be sufficient enough to meet about 62 days of global demand. OPEC members would like to see them fall to about 52 to 54 days worth of demand.

An increase in OPEC production “will not happen until we are sure that global inventories return to their normal levels,” Naimi told the Arab daily Al-Hayat.

U.S. crude oil inventories rose to the highest level in two decades earlier this month. However, Naimi did note that demand in Asia, particularly China, seems to be accelerating and crude prices could reach $75 a barrel by the end of the year.

Still, analysts are urging caution, as production quota compliance among OPEC nations is beginning to wane. Production compliance among OPEC nations reached 85% in March – an impressive level by historical standards. Members only delivered on 78% of the promised cuts in April as prices recovered.

Saudi Arabia, OPEC’s largest and most influential producer, actually pumped below its target level in April, but other members have been cheating. Iran, OPEC’s second-biggest producer, accounted for 410,000 bpd of the overproduction last month, while Angola exceeded its target by 170,000 bpd and Venezuela overproduced 130,000 bpd the IEA reported.

“Lagging quota compliance by the non-Gulf Arab states – hovering around 50% – has hamstrung any real discussion of a potential cut to accelerate the drawdown of the glut,” PFC Energy analyst David Kirsch said in a report today. “Purported requests by Angola to revise or suspend its quota, as well as moves by Venezuela to certify a higher production figure leave any proposal for further output restraint effectively stillborn.”

Source: OPEC to Maintain Production Levels at Thursday Meeting

Gold slipped in Europe on Thursday as the dollar firmed against the euro ahead of an expected rate cut by the European Central Bank later in the session, and oil prices fell $1 a barrel.

Investors are eyeing rate cuts this session from both the ECB and the Bank of England and key U.S. jobs data on Friday for clues as to the future direction of trade.

Spot gold slid to $769.25/771.25 an ounce at 1000 GMT from $772.60 an ounce in New York late on Wednesday.

“With a lower euro-dollar and lower oil, gold is pressured a bit,” Commerzbank senior trader Michael Kempsinki said. “Around $735, $750, we should see some good buying interest coming into the market.”

The dollar firmed in early trade against the euro, as did the yen, as investors worried about the breadth and depth of the global recession bought into the currencies.

A stronger dollar tends to weigh on gold, which is commonly bought as a hedge against weakness in the U.S. currency.

The European Central Bank and Bank of England are expected to announce rate cuts later in the session.

The ECB is widely seen cutting by 50 basis points to 2.75 percent, while the BoE could slash its rates by up to 1 percentage point to 2.00 percent.

The other main external driver of gold, oil prices, added pressure on the precious metal as they fell to a four-year low on Thursday.

Oil has been hit by concerns that a deep recession could have a severe impact on demand. These outweighed the price-positive effect of a 400,000-barrel drop in U.S. crude inventories reported on Wednesday.

Physical demand is easing in some of gold’s traditional markets as traders await price falls. Indian buyers are looking for prices of around $740 an ounce before making purchases, dealers reported.

PLATINUM STEADIES

Platinum prices were steady, but held only a touch over those of gold, as traders worried about the impact of the recession on carmakers, who account for around half of all demand for the white metal.

“Concerns over industrial demand for the metals – particularly from the auto sector – will continue to keep prices under pressure for the time being,” Standard Bank analyst Leon Westgate said in a note.

“In the background however, mounting production cutbacks and mine closures suggest that there may be a very rapid price recovery once the first signs of increased metals demand start to emerge,” he added.

Spot platinum was quoted at $796.50/816.50 an ounce, little changed from $793.50 in New York trade late on Wednesday. Its sister metal palladium was at $170/178 an ounce against $171.

Zurich Cantonal Bank said holdings of its platinum-backed exchange-traded fund rose 27 percent to 105,200 ounces on Dec 1, from 83,000 ounces in September. Its palladium-backed ETF saw inflows of 12 percent in the same period.

Among other precious metals, spot silver slipped to $9.57/9.65 an ounce from $9.63.

The world’s largest silver-backed ETF, the iShares Silver Trust (SLV), said its silver holdings fell 32.24 tonnes to 6,651.79 tonnes on Dec 3.

Jan Harvey,Sue Thomas
LONDON, Dec 4 (Reuters)

Oil rose above $47 a barrel on Wednesday but the gains could be limited as further signs of weakening U.S. oil demand are expected to emerge in weekly data due out later in the session.

The market has fallen $100 a barrel from July’s record high of $147.27 to stand at a 3 1/2-year low, pressured by the gloomy economic outlook and after OPEC deferred a decision on whether to cut supplies until a Dec. 17 meeting.

U.S. crude rose 22 cents to $47.18 a barrel by 1020 GMT. It settled down $2.32 at $46.96 on Tuesday, the lowest settlement since May 2005. Brent crude gained 22 cents to $45.66.

“It’s a correction after yesterday’s fall,” said Christopher Bellew of Bache Commodities, referring to oil’s gain. “It’s coming at a surprising time because the data is supposed to show further builds.”

U.S. stocks data, to be released at 1535 GMT, are expected to show a 1.7 million-barrel rise in crude inventories for the week ended Nov. 28, the third consecutive week of increases, according to a Reuters poll.

Distillate stocks were forecast to show a 300,000-barrel increase while gasoline supplies could be up 900,000 barrels as demand probably fell, even with lower pump prices ahead of the Thanksgiving holiday, some analysts said.

Recession worries could have kept many Americans closer to home than usual this Thanksgiving, the American Automobile Association said.

The U.S. National Bureau of Economic Research said on Monday the current recession, in which the U.S. has been plunged for a year, could be the worst since World War Two.

Adding further pressure on prices, supplies appear to be falling more slowly than expected.

OPEC oil supply fell in November for a third consecutive month as members began to implement a deal to cut supplies in a move to halt the slide in oil prices, a Reuters survey showed on Tuesday.

But the survey suggested the Organization of the Petroleum Exporting Countries met only 66 percent of a pledge to lower output by 1.5 million barrels per day in November, less than analysts expected.

“We suspect that prices could move even lower from here, at least through to OPEC’s next meeting,” Edward Meir, analyst at MF Global, said in a report. “Many producers are simply not moving fast enough to rein in output.”

Alex Lawler, London, Maryelle Demongeot, Singapore

Dec 3 (Reuters)

The day’s focal point was the weekly inventory report from the Energy Information Administration. Crude inventories rose 200,000 barrels for the week ended May 9, the EIA said.
Gasoline supplies fell more than expected last week, the EIA report showed, down 1.7 million barrels, while distillate inventories, which include heating oil and jet fuel, climbed 1.4 million barrels. But the refinery utilization rate stood at 86.6% of capacity last week, up from 85.0% a week earlier.

“Although the DOE numbers were slightly disappointing to traders’ estimates, we still had a build in crude supplies and perhaps more importantly, saw a large increase in refinery utilization rates,” said Thomas Hartmann, of Altavest Worldwide Trading.

“We’ve seen the crack spread widen materially in the last two weeks, which should encourage more gasoline production over the coming weeks as refiners see better profit margins,” Hartmann added.

Source: Crude Backs Down