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Oil prices plunge on world markets

21 April 2009 09:00 (UTC +04:00)

Baku-APA-Economics. Oil prices languished below $46 a barrel Tuesday in Asia after renewed doubts about the health of U.S. banks sent crude and stock markets tumbling, AP reported.
Benchmark crude for May delivery rose 7 cents to $45.95 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange.
After trading near $50 a barrel so far this month, oil prices plunged $4.45 on Monday to settle at $45.88, following a broad sell-off of stocks.
Bank of America Corp. said it set aside $13.4 billion to cover lending losses, even as it posted a profit for the first quarter. And anxiety grew about the results of the U.S. government’s "stress tests" to determine if banks will need more bailout money.
The Dow Jones industrial average dropped 3.6 percent, the Standard & Poor’s 500 index fell 4.3 percent.
"Oil is being driven by perceptions about the economy, and there are plenty of obstacles to an international recovery," said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney. "It’s going to be difficult for the next year."
Traders also are focused on weekly petroleum inventory data that the Energy Information Agency will release Wednesday. Analysts expect a build of 3 million barrels in crude stocks, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Crude stocks already are near 19-year highs.
"There’s a lot of oil around in the U.S.," Moore said.
Moore said he expects crude prices to rise to $58 a barrel by the end of the year as the Organization of Petroleum Exporting Countries moves to reduce production in line with falling demand. OPEC has already announced 4.2 million of output cuts since September.
"If prices are in the mid-$40s, OPEC might be inclined to leave production targets where they are," Moore said. "But at some point OPEC may cut again as demand forecasts keep getting wound back."
In other Nymex trading, gasoline for May delivery was steady at $1.41 a gallon and heating oil rose 0.47 cents to $1.34 a gallon. Natural gas for May delivery was steady at $3.55 per 1,000 cubic feet.
In London, Brent prices rose 29 cents to $50.15 a barrel on the ICE Futures exchange.