Oil drops on poor US GDP data

LONDON (AFP) - World oil prices fell sharply Friday on profit-taking, after bumper gains earlier this week, on news that the US economy shrank more sharply than expected in the fourth quarter of 2008.
New York's main contract, light sweet crude for April delivery, sank 1.71 dollars to 43.51 dollars a barrel. Brent North Sea crude for April shed 1.02 dollars to 45.49 dollars per barrel. "Prices could come off a little ahead of the weekend," said VTB Capital analyst Andrey Kryuchenkov.
The market accelerated losses after data showed that the US economy " the world's biggest energy consumer " shrank at a faster than expected pace in the fourth quarter of 2008.
The US economy shrank at a 6.2 percent annual pace in the 2008 fourth quarter, government data showed Friday highlighting the stunning meltdown in activity late last year.
The decline was the worst since the first quarter of 1982, the Commerce Dept data showed. Oil also retreated on profit-taking after rising for a third consecutive day on Thursday, when the market was buoyed by signs of stabilizing energy demand.
"Crude futures rallied on Thursday, still underpinned by a fairly bullish report from the EIA on Wednesday and concerns over OPEC supplies," Kryuchenkov added.
"Persistent supply jitters ahead of the group's next meeting in March in Vienna are still market supportive."
Oil prices had surged in recent days in reaction to rising US gasoline stocks and indications of output cuts by the Organisation of the Petroleum Exporting Countries (OPEC).
OPEC, which pumps about 40 percent of the world's oil, announced late last year output cuts of 4.2 million barrels per day in a bid to reverse tumbling prices, and members looked to be sticking to the planned reductions.
Prices bounced higher Wednesday after the US government's Energy Information Administration (EIA) said gasoline stocks fell 3.4 million barrels in the week ending February 20. The market had expected no change.
But the market hit reverse gear on Friday on downbeat data in the recession-hit United States.
Prices fell due to "an over-reaction to gasoline stocks in the past few days... and fresh weak economic data out of the US that dented market sentiment," said Mark Pervan, senior commodities analyst for ANZ bank in Melbourne.
Oil prices have slumped since hitting a record high above 147 dollars in July, as the global economic slowdown has hammered world energy demand.
OPEC, which pumps about 40 percent of the world's oil, announced late last year output cuts of more than four million barrels per day in a bid to reverse tumbling prices.
Producers appear to be aggressively sticking to their output cuts.
But the cartel will find it "extremely difficult" to boost oil prices by slashing production because of the uncertain economic climate, energy consultancy CGES had warned earlier this week.