Oil falls near $90 on recession fears
( Reuters ) - Oil slipped toward $90 a barrel on Thursday amid growing fears the U.S. economy will slip into a recession and hurt demand from the world's top energy consumer.
The loss stretches oil's slide to about 10 percent since the record over $100 a barrel hit January 3, taking pressure off of producer-group OPEC to boost output at its next meeting in February.
"The market may rally a bit but, with recession in the U.S. becoming the major driver, it looks like the sentiment is to sell rallies rather than buy dips," said Nauman Barakat, senior vice president at Macquarie Futures USA in New York.
U.S. light crude for February delivery fell 71 cents to $90.13 a barrel, the lowest settlement since December 11. London Brent crude dropped 75 cents to $88.75.
In fresh signs of economic weakness, factory activity in the U.S. Mid-Atlantic region contracted sharply in January and home building in December fell to the slowest pace since the early 1990s, according to reports on Thursday.
"The Philly Fed index (of factory activity) plunged into recession territory," said Ian Shepherdson, chief U.S. economist at High Frequency Economics, in Valhalla, N.Y. "This is very alarming, because we had pinned our hopes on the relative strength of the corporate sector offsetting some of the housing hit."
Federal Reserve Chairman Ben Bernanke said Thursday that more interest rate cuts may be necessary to counter the worsening economic outlook, but he said the Fed has not forecast a recession.
U.S. demand for crude oil and petroleum products fell 0.6 percent in December from a year earlier as a slowing economy and higher pump prices reduced gasoline consumption, the American Petroleum Institute said on Thursday.