Oil falls towards $45 as global demand dwindles
Oil fell toward $45 a barrel on Wednesday as further evidence of a large drop in global crude demand emerged.
U.S. government data from the Energy Information Administration (EIA) showed crude stocks in the world's largest energy consumer rose 700,000 barrels last week.
While demand for gasoline remains relatively strong in the United States, up 1.6 percent from a year ago over the past four weeks, total U.S. demand for oil products is down 2.1 percent year-on-year as the recession curbs consumption.
It looks like there's a genuine rebound in gasoline demand against a backdrop of extremely weak demand overall, Antoine Halff, First Vice President of Research at Newedge Group in New York, said.
Gasoline stocks fell 3 million barrels, far more than the 400,000 barrels decline analysts had expected.
U.S. light crude for April delivery fell 61 cents a barrel to $45.10 by 1458 GMT (10:58 a.m. EDT), having pulled back sharply on Tuesday from a two-day rally which saw prices rise above $48 a barrel for the first time since January.
Brent fell 42 cents to $43.54 a barrel.
Crude imports into China, the world's second-largest oil consumer, saw a surprise 15 percent drop in February, extending an 8 percent drop in January, as oil firms scaled back purchases after heavy stockpiling last year and on slow domestic demand.
The low crude imports came after data released on Wednesday showed China's exports tumbling in February as the world's third-largest economy felt the full force of the global financial crisis.
The Chinese crude data was really quite poor, and that's stalled any move toward $50 a barrel, Sucden Financial trader Robert Montefusco said.
Prices are going to struggle to get a great deal higher given the extent of the economic problems we're seeing in the world.
SLOWDOWN
Oil prices have collapsed by more than $100 a barrel since July, as a slowing world economy consumes less fuel.
German manufacturing orders fell 8 percent in January alone, data on Wednesday showed, indicating a deeper than previously expected recession in Europe's largest economy.
Crude prices have been underpinned by expectations the Organization of the Petroleum Exporting Countries may announce further production cuts when the producer group meets in Vienna on Sunday.
OPEC has already curbed member output quotas by a total of 4.2 million barrels per day (bpd) since September in a bid to boost prices. Analysts estimate OPEC members have successfully implemented around 80 percent of those cuts.
Opinion within OPEC appears split as to whether further production cuts are needed, or whether the group should push for tighter compliance with existing quotas.
Qatar's energy minister Abdullah al-Attiyah told Reuters on Wednesday a further 800,000 bpd needed to be removed from the market before OPEC discussed further cuts.
But Algeria, Venezuela and Libya have all raised the prospect of another OPEC supply reduction.
Supportive rhetoric from OPEC is likely to keep prices intact ahead of the meeting, but if there are no changes to current production levels then the market could well be disappointed, said VTB Capital analyst Andrey Kryuchenkov.
(Additional reporting by Reuters New York Energy Desk and Maryelle Demongeot in Singapore; editing by Sue Thomas)
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