* Saudi Arabia to deepen supply cuts in February
* U.S. consumer confidence at record low in December
(Updates prices, adds detail on Saudi cuts)
By Edward McAllister
NEW YORK, Dec 30 (Reuters) - Oil prices fell $1 on Tuesday
as data signalling the sickly world economy outweighed
expectations of further Saudi supply cuts in February and
tension in the Middle East due to the Israeli-Hamas conflict.
Tuesday brought a raft of demand-destructive news,
including data showing the U.S. holiday shopping season was the
weakest since 1970 and consumer confidence in the world's
largest energy user was at record lows in December.
U.S. crude <CLc1> was down $1 at $39.02 a barrel by 1:13
p.m. EST (1813 GMT), having earlier touched a session low of
$37.93. London Brent <LCOc1> fell 76 cents to $39.79.
"Concerns over the state of the global economy eclipses
fears that the conflict between Israel and Hamas will inflame
tensions in the Middle East," Addison Armstrong, analyst at
Tradition Energy, wrote in a note.
Oil prices had jumped as much as 12 percent on Monday after
Israel launched its fiercest air offensive in Hamas-ruled Gaza
in decades. []
U.S. consumer confidence fell to a record low in December
as the worst job market in 16 years hammered sentiment, the
U.S. Conference Board said on Tuesday. []
The U.S. shopping season was the worst since at least 1970
due to the recession, according to the ICSC-Goldman Sachs
Weekly Chain Store Sales index, released Tuesday.
[]
Prices of U.S. single-family homes in October fell a record
18 percent from a year earlier, according to the Standard &
Poor's/Case-Shiller Home Price Indices released Tuesday, a
further indication of deep recession. []
"This market is driven by expectations. With home prices
plunging and consumer sentiment plunging, the outlook for
energy demand and prices can only reflect that," said John
Kilduff, senior vice president at MF Global in New York.
South Korea's November factory output fell more than 10
percent in November from October, amid fears that Asia's
fourth-largest economy is slipping into a recession.
[]
Oil has dropped more than $100 from a record peak above
$147 a barrel in July, with the recession denting demand in
large consumer nations.
ANOTHER SAUDI OUTPUT CUT EXPECTED
The Organization of the Petroleum Exporting Countries
already has announced its biggest-ever production cut of 2.2
million barrels per day to fight the oil price slide.
Top OPEC exporter Saudi Arabia is set to cut oil supplies
further in February, market sources said on Tuesday,
potentially taking output below its agreed OPEC target.
[]
The group already has cut output three times in an effort
to remove about 5 percent of world supply.
OPEC oil supply, excluding Iraq and Indonesia, is expected
to fall by 400,000 bpd in December as members boost compliance
with their deal to reduce output, consultant Petrologistics
said. []
The estimate indicates OPEC has more than delivered on its
pledge to lower the supply from 11 members to 27.3 million day
from Nov. 1 to prop up prices.
An updated poll of analysts forecast that U.S. crude stocks
fell by 1.5 million barrels last week, while distillate
inventories rose by 1.1 million barrels and gasoline stocks
increased by 1.5 million barrels. []
Weekly U.S. fuel inventory data is due on Wednesday.
(Additional reporting by Robert Gibbons in New York,
Christopher Johnson and Jane Merriman in London and Baizhen
Chua in Singapore; Editing by Walter Bagley)
