Oil falls below $42

Oil slid below $42 a barrel on Thursday, as fears over faltering demand in the global economy outweighed US data showing falling gasoline and distillate stocks in the world's top energy consumer. Traders will watch for weekly jobless claims and December durable goods orders later on Thursday, as well as advance fourth-quarter gross domestic product data on Friday, for further clues on the health of the US economy.
US crude fell 53 cents a barrel to $41.63 by 0627 GMT, while London Brent crude lost 68 cents to $44.22. Crude prices plunged 9 percent earlier this week on fresh signs that the United States was still deeply mired in recession. "The market is going to drift lower in the days ahead - we will probably test the lows of between $35 and $39, but it should not go much lower than that - the bottom is being put in," said Mark Waggoner, president of Excel Futures in California.
Oil prices rebounded on Wednesday after data released by the US Energy Information Administration showed a 1 million-barrel draw in distillate stocks last week as cold weather hit the US Northeast, the world's top heating oil market, and a surprise 100,000-barrel fall in gasoline supplies.
Crude also got a boost from remarks by Opec Secretary General Abdullah al-Badri at the World Economic Forum in Davos, Switzerland, that an oil price of $50 a barrel was too low to encourage investment in new supply and the cartel would fully enforce supply curbs by the end of this month. But jitters over the data release later in the day, likely to give a grim reading of the US economy, weighed on market sentiment and sparked an early bout of selling.
Durable goods orders, due at 1330 GMT, are estimated to have fallen 2.0 percent in December after a 1.5 percent decline in November, economists polled by Reuters said. US weekly jobless count is expected to show that 580,000 people filed new claims for state unemployment insurance in the week ended Saturday, following a week with 589,000 new claims.
All eyes will be trained on the government's first snapshot of the US economy in the fourth quarter, due on Friday, which will show it at its weakest in 26 years, hit by plunging consumer spending and surging unemployment rates.
RUN CUTS The dismal forecast comes atop the International Monetary Fund's forecast on Wednesday that world economic growth this year will fall to its slowest since World War Two.