Oil deepened losses below $58 a barrel on Friday on worries about a wobbly US economy, with Opec's widely-expected decision on Thursday to keep oil output curbs having little impact. US light crude for April delivery weakened 31 cents to $57.24 a barrel, stretching losses of 61 cents on Thursday.
"There's a big cloud in the sky. The question mark is about the US economy and concerns over the housing industry because that will have a big impact on consumer demand, which may affect oil consumption," said Andrew Harrington, an analyst at ANZ Bank. Jitters persist in the US supreme lending market, where defaults on mortgages offered to higher-risk borrowers threaten to damage financial institutions.
Former Federal Reserve chairman Alan Greenspan warned on Thursday that rising defaults in supreme mortgage markets could spill over into other economic sectors. This follows some weak economic numbers, with the latest being US retail sales data for February up 0.1 percent versus a forecast 0.3 percent.
Opec's widely expected decision on Thursday to keep oil output curbs in place, amid rapidly declining oil stocks in consumer nations and the recent sell-off in share markets, could signal worries about a weakening economy.
"We are watching developments on world stock markets, to assess their possible impact on the global economy and, in particular, on energy demand," Opec President and United Arab Emirates' Oil Minister Mohammed bin Dhaen al-Hamli. Hamli said he might convene another meeting in June, three months before the next scheduled meeting, if necessary.
The cartel, which pumps over a third of the world's oil, had agreed cuts totalling 1.7 million barrels per day, or six percent of supplies, at its previous two meetings. The emphases now was on ensuring those reductions were implemented in full. "Our commitment is to keep the market supplied.
To oversupply and create imbalance would make no sense at all," Nigerian Minister of Energy Edmund Dakar said. Oil traders are also watching US gasoline stocks closely ahead of peak demand in the summer driving season, as stocks fall due to refinery maintenance works. US inventories of gasoline fell 2.5 million barrels to 213.9 million last week bringing them 3.4 percent below a year ago due to lower refinery run rates. The fall in gasoline stockpiles was the fifth consecutive weekly decline.
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