* U.S. December durable goods orders likely to be weak
* Q4 GDP data to show economy at its weakest in 26 years
* Deeper U.S. refinery run cuts may offer support
By Jennifer Tan
SINGAPORE, Jan 29 (Reuters) - Oil edged down towards $42 a
barrel on Thursday, as fears over faltering demand in the
global economy outweighed U.S. data showing lower gasoline and
distillate stocks in the world's top energy consumer.
Traders will watch for U.S. weekly jobless claims and
December durable goods orders later on Thursday, as well as
advance fourth-quarter gross domestic product data on Friday,
for further clues on the health of the U.S. economy.
U.S. crude <CLc1> eased 11 cents a barrel to $42.05 by 0230
GMT, while London Brent crude <LCOc1> fell 15 cents to $44.75.
Crude prices plunged 9 percent earlier this week on fresh
signs that the largest oil consumer the United States was still
deeply mired in recession.
"The market is probably going to drift lower in the days
ahead -- we will probably test the lows of between $35 and $39,
but it should not go much lower than that -- the bottom is
being put in," said Mark Waggoner, president of Excel Futures
in California.
Oil prices rebounded on Wednesday after data released by
the U.S. Energy Information Administration showed a 1 million
barrel draw in distillate stocks last week as cold weather hit
the U.S. Northeast, the world's top heating oil market, and a
surprise 100,000 barrel fall in gasoline supplies. []
Crude also got a boost from remarks by OPEC Secretary
General Abdullah al-Badri at the World Economic Forum in Davos,
Switzerland, that an oil price of $50 a barrel was too low to
encourage investment in new supply and the cartel would fully
enforce supply curbs by the end of this month. []
But jitters over the data release later in the day, likely
to give a grim reading of the U.S. economy, weighed on market
sentiment and sparked an early bout of selling.
Durable goods orders, due at 1330 GMT, are estimated to
have fallen 2.0 percent in December after a 1.5 percent decline
in November, according to economists polled by Reuters.
Furthermore, the U.S. weekly jobless count is expected to
show that 580,000 people filed new claims for state
unemployment insurance in the week ended Saturday, following a
week with 589,000 new claims.
All eyes will be trained on the government's first snapshot
of the U.S. economy in the fourth quarter, due on Friday, which
will show it at its weakest in 26 years, hit by plunging
consumer spending and surging unemployment rates.
[]
The dismal forecast comes atop the Internation Monetary
Fund's forecast on Wednesday that world economic growth this
year will fall to its most sluggish since World War Two.
[]
On the supply front, price support for oil is likely to
come from expanding U.S. refinery run cuts, analysts said.
U.S. refiners are likely to take more processing units down
for longer periods during spring maintenance as prolonged
economic weakness crimps demand for fuel.
"Crude stockpiles will continue to build, but distillates
and gasoline will leave the market this year as refineries
remain down for longer periods -- prices will start going
higher, and will eventually lead the market higher as we get
into the summer," Waggoner said.
OPEC's supply cuts since the second half of 2008, in
reaction to the fall of more than $100 in oil prices since July
as global economic weakness slams energy demand, have also
offered a boost.
Kuwait said on Tuesday it would support a further
production cut if needed, echoing comments by some other OPEC
members, while smallest member Ecuador said it would comply
with the production cuts agreed by the cartel. []
[]
OPEC next meets on March 15 to decide on output policy.
(Editing by Ben Tan)
(jennifer.tan@thomsonreuters.com; +65-6417 4679; Reuters
Messaging: jennifer.tan.reuters.com@reuters.net)
