LONDON: Oil prices sank on Friday as traders took their cue from plunging stock markets amid the worldwide economic slowdown that has slashed energy demand, analysts said.
Brent North Sea crude for April delivery weakened 1.51 cents to $40.48 a barrel.
New York s main futures contract, light sweet crude for delivery in March, fell $1.68 to $37.80 per barrel. The contract expires at the close.
Fears over a deteriorating global economic outlook sent equity markets tumbling . as investors shed riskier positions, with oil prices tracking them lower amid weakening demand concerns, said Sucden analyst Nimit Khamar.
Global equities plunged again on Friday as investors ran for cover amid deep concern over the troubled financial sector and a spreading worldwide downturn, dealers said.
Wall Street stocks dived at the open, one day after falling to six-year lows on gloomy economic data which underlined the depth of a US slowdown.
In mid-afternoon European trade, London shed 3.08 percent, Frankfurt sank 4.13 percent and Paris was down 3.59 percent.
Crude prices had rebounded sharply Thursday after the US Energy Information Administration (IEA) posted a surprise fall in US crude reserves that raised the prospect of renewed demand in the world s biggest energy consumer.
New York crude rallied almost $5 and Brent oil jumped more than $2 after the IEA said US crude stocks fell 200,000 barrels in the week to Feb. 13, after several weeks of big increases.
However, a greater-than-expected rise in petrol stockpiles indicated that energy demand was still low, according to traders.
And fresh data underscored the deepening recession in the United States, as it emerged that continuing claims for US unemployment benefits rose by 170,000 to 4.987 million for the week ending Feb. 7.
With the positive news from the EIA on weekly US fuel inventories, oil futures rallied yesterday despite the grim macroeconomic data from the US, added VTB Capital analyst Andrei Kryuchenkov.
Oil prices have slumped from record highs above $147 a barrel reached last July, as the market has been hit by weaker energy demand because of the global economic downturn.
Last week, the OPEC oil producers cartel trimmed its forecasts for global oil demand, forecasting that it would shrink by 0.67 percent in 2009 because of economic depression in industrialized countries. -AFP
