Oil prices dip on weak energy demand outlook

LONDON (AFP) - Oil prices pulled under 37 dollars per barrel on Tuesday amid pessimism over the state of the global economy and the poor outlook for energy demand, analysts said.
New York's main contract, light sweet crude for delivery in February, dropped 99 cents to 36.60 dollars a barrel on the New York Mercantile Exchange (NYMEX).
Brent North Sea crude for February shed 17 cents to $42.74 on London's InterContinental Exchange. The latest falls came as world stock markets spiralled lower on stubborn investor fears about the impact of the ongoing global financial crisis on company results. Oil dived under 40 dollars in New York on Monday on concerns that a deepening global economic downturn could extend the slump in demand for energy, traders said. New York crude fell 3.24 dollars and Brent oil sank 1.51 dollars. "Economic weakness is weighing heavily on investors and traders' minds and it helped to press oil prices lower again yesterday," said analysts at US-based energy consultancy Cameron Hanover on Tuesday.
Prices had lost 16 percent last week on concerns that a US stockpile buildup reflected how the global economic slump was damaging demand, analysts said. On Wednesday, traders will turn their attention to the latest weekly report on energy stockpiles in key consumer the United States.
"The market is focused on rising inventories at the moment as demonstrated by the significant increase in crude inventories at Cushing, Oklahoma," Cameron Hanover analysts added.
Oil reserves in Cushing, where light sweet crude oil is stored, are currently at maximum capacity. Prices had tumbled last week after a brief bounce above 50 dollars on the back of jitters over the Russia-Ukraine gas standoff and the ongoing fighting in Gaza.
Russia had accused Ukraine of illegally siphoning off gas destined for Europe after Moscow cut off gas supplies to Ukraine's domestic market on New Year's Day. The European Commission complained on Tuesday that "little or no gas" was flowing from Russia through Ukraine to Europe and demanded full access to distribution points for its monitors.
Elsewhere, Israeli troops and Hamas fighters traded fierce gunfire on the streets of Gaza City on Tuesday as Palestinian president Mahmud Abbas accused the Jewish state of trying to "wipe out" his people.
Israeli special forces backed by tanks and air strikes lunged ever deeper into the largest city in Gaza, advancing several hundred metres (yards) into several neighbourhoods in the south, witnesses and correspondents said.
The thuds of tanks shells and the rattle of gunfire had kept terrified residents awake overnight, although many had fled the area. Witnesses said the fighting was the most intense of the 18-day-old conflict.
The clashes come as Israeli media predicted that the country's leadership may approve an expansion of its massive offensive in Gaza despite ongoing talks in Egypt on how to end a war launched to stop rocket fire.