LONDON: The oil market kicked off 2009 feebly on Friday, falling nearly 8 percent before trimming back losses to around 1 percent once the U.S. market opened.
US light, sweet crude fell $0.40 to $44.20 a barrel by 1437 GMT, reversing part of Wednesday s $5.57 a barrel gains. It touched a low of $41.05 on Thursday, a nearly 8 percent drop.
London Brent dropped $1.18 to $44.11 a barrel.
It s a continuation of what we saw on the last day of the year carrying over into the first day of the year. A lot of portfolios are looking to clear their books, said analyst Olivier Jakob of Petromatrix.
In 2008 oil initially rose by more than $50 to touch a record peak of $147 before falling by more than $110.
On the last trading day of 2008 it surged 14 percent after weekly US data showed a decrease in refinery activity and an unexpected 500,000-barrel rise in crude stocks in the world s biggest oil consumer.
Refined product inventories also rose, though less than analysts expected. Gasoline stockpiles were up 800,000 barrels, versus a forecast of 1.5 million barrels, while distillates rose by 700,000 barrels, versus an expected 1.1 million barrels.
The recent crop of demand side indications for oil has been rather ambiguous. In itself, that is something of a change, given a fairly long period during which the demand side numbers have been weakening fairly consistently, Barclay s Capital wrote in a note to investors.
Analysts said economic factors were pushing markets down while geopolitical events were serving as support.
Oil markets have also watched cautiously the dispute between the world s biggest non-OPEC oil exporter, Russia, and its neighbors over natural gas supplies.
Russia shut off gas to its neighbor Ukraine on Thursday, after a contract dispute, but said it had increased supplies to other European states to try to reassure its premium-paying customers.
The row could stir new doubts about Moscow s reliability as an energy supplier and fuel suspicions in the West – already running high since Russia s war with Georgia last August – that the Kremlin bullies its pro-Western neighbors. However, similar past disputes rarely had an impact on oil flows. -Additional reporting by Chua Baizhen in Singapore.
