(Corrects headline to show oil fell below $41)
* New front-month March contract edges up after fall
* February contract expires up 6 percent on short covering
* Eyes bearish demand; U.S. weekly crude stocks data seen
up
(Updates prices)
By Maryelle Demongeot
SINGAPORE, Jan 21 (Reuters) - Oil dropped to below $41 a
barrel on Wednesday, amid fears of a deep recession and weak
demand hurting consumption.
Asian stock markets opened lower, with Japan's Nikkei
<> down around 2 percent after global stocks and bond
prices fell in the previous session with benchmark S&P 500 and
Nasdaq market both losing more than 5 percent. []
U.S. light crude for March delivery <CLc1> dropped 23 cents
to $40.61 a barrel by 0651 GMT after falling $1.73 the previous
day. The March U.S. futures contract took over as front month.
The February contract, which expired on Tuesday, settled up
$2.23, or about 6 percent, at $38.74 a barrel, on
short-covering.
London Brent crude <LCOc1> weakened 27 cents to $43.35 a
barrel.
"Weakness in oil consumption continues to weigh on the oil
price," the Commonwealth Bank of Australia said in its daily
commodity report.
The International Energy Agency, a leading energy watchdog,
last week joined the ranks of forecasters predicting a fall in
global oil demand this year and cut its estimate for 2009
demand by 940,000 barrels per day to 85.3 million bpd, a fall
of about 500,000 year-on-year. []
Oil has plunged from record highs above $147 a barrel in
July as a global economic slowdown has slashed oil consumption,
prompting the Organization of Petroleum Exporting Countries
(OPEC) to agree to a series of output cuts aimed at balancing
the market and supporting prices.
OPEC is fully enforcing its deepest ever oil supply curbs,
whichh should be enough to boost prices, the group's president,
Angolan oil minister Botelho de Vasconcelos, told Reuters on
Tuesday. []
But demand has yet to respond to the cuts.
China, one engine in the six-year commodity price rally
that started in 2002, was expected to release fourth-quarter
GDP data this week that economists say will show 7.0 percent
growth, the slowest pace of expansion in nearly a decade for
the world's third-biggest economy. []
A Reuters poll of analysts forecast that crude oil stocks
in the United States, the world's biggest consumer, rose by 1.4
million barrels last week, with distillate stocks seen down 1.4
million barrels due to cold winter weather.
Gasoline stocks would be up 2.1 million barrels, up 5.1
million barrels from a year ago.
Data will be released on Thursday, a day later than usual,
following the U.S. holiday on Monday honoring civil rights
leader Martin Luther King Jr. []
(Editing by Clarence Fernandez)
