Oil price falls below $51
Perth, May 1, 2009
Oil dipped below $51 a barrel on Friday, reversing the previous day's small gains as investor caution over auto maker Chrysler's bankruptcy tempered a growing sense of optimism over the world economy.
Trading was expected to be relatively thin with the May Day holiday closing many markets across Asia and Europe, and ahead of US factory order data for March expected to give a better sense of whether the recession in the United States is easing.
US crude for June delivery fell 26 cents to $50.86 a barrel by 0155 GMT, unwinding Thursday's 15-cent rise built partly on early gains in equity markets.
London Brent crude fell 18 cents to $50.62 a barrel.
"Although difficulties of the U.S auto makers have been pretty much factored in, Chrysler's bankruptcy will have some impact on sentiment," said David Moore, chief commodities analyst at the Commonwealth Bank of Australia.
Chrysler filed for Chapter 11 bankruptcy and announced an industry-changing deal with Fiat, after being pummeled by sliding auto sales and unable to reach agreement on restructuring its debt.
The news caused US stocks to row back early gains on upbeat jobs data and close the day almost flat.
While oil still eked out a third monthly gain in April of nearly 3 percent, concerns about weak oil demand in the near-term and rising crude inventories in the US -- now at their highest since early September 1990 -- have slowed the pace sharply, with prices locked in a $45-$55 trading range since mid-March.
Traders are now looking for further signs of an improving global economy to support prices at the $50 level that many Opec ministers have said is acceptable for now.
One such measure emerged on Friday from China, where the official purchasing managers' index (PMI) for April rose to 53.5 from 52.4 in March, official data showed on Friday, marking its fifth consecutive month of improvement.
On Thursday, US data had shown that the number of workers filing new claims for unemployment aid fell unexpectedly last week, suggesting the pace of layoffs was easing, although US consumer spending fell in March after two straight months of increases.
Analysts have warned that the first signs of world economic recovery remain fragile, and conflicting economic data show that the recovery is likely to be patchy.
Japan has edged back into deflation for the first time in more than a year, March figures showed, as joblessness rises, showing the world's No.2 economy faces many problems even as its major manufacturers show signs of stabilising. -Reuters