* Japan economy shrinks most since 1974
* South Korean exports fall by a third
* IEA sees oil supply crunch as demand rises from 2010
* President Obama to sign stimulus bill on Tuesday
(Updates prices)
By Christopher Johnson
LONDON, Feb 16 (Reuters) - U.S. oil prices slipped below $37
a barrel on Monday as a raft of bearish economic data focused
attention on declining global oil demand.
Japan's economy shrank in the last quarter by its most since
the first oil crisis in 1974, hit by an unprecedented slump in
exports, which is likely to lead to more calls for extra
stimulus steps to fight the deepening recession. []
The impact of the recession is also being felt in South
Korea, where January exports dropped by a record 33.8 percent
from a year earlier, even worse than forecast. []
Energy demand is already contracting in the United States,
the world's biggest oil consumer, undermining oil prices that
have fallen by more than 70 percent from their peak at almost
$150 per barrel last year.
U.S. light crude oil futures for March delivery <CLc1> were
down 88 cents at $36.63 a barrel by 1800 GMT in electronic
trade, after gaining $3.53 on Friday. The New York Mercantile
Exchange was closed for Presidents Day and was due to reopen on
Tuesday.
London Brent crude <LCOc1> for April fell $1.50 to $43.31,
shaving its premium over U.S. oil, which reflect high stock
levels at the main U.S. storage hub in Cushing, Oklahoma.
The head of the International Energy Agency (IEA)
acknowledged the fall in oil demand on Monday and said there
could be an oil market supply crunch from next year once global
oil demand begins to recover if investment in new oil production
and alternative forms of energy were reduced by the downturn.
SUPPLY CRUNCH
IEA Executive Director Nobuo Tanaka told reporters on the
sidelines of a conference in London he expected world oil demand
to resume growth from next year, rising by about 1 million
barrels per day (bpd) in 2010.
"Currently the demand is very low due to the very bad
economic situation," Tanaka said.
"But when the economy starts growing, recovery comes again
in 2010 and then onward, we may have another serious supply
crunch if capital investment is not coming," Tanaka said.
Analysts see most oil prices trapped within a fairly tight
trading range for the time being.
"We continue to maintain that crude prices will be trapped
in a sideways band for the next several weeks," brokers MF
Global said in a note to clients. "Rallies above $50 look
vulnerable, as given the deteriorating global macro backdrop, we
do not think prices north of that level will be sustainable."
Oil's jump on Friday was largely boosted by renewed optimism
that a giant U.S. stimulus package could help pull the economy
out of a 14-month recession, while the gains were further
encouraged as traders booked profits by selling the spread
between front and second month futures contracts.
U.S. President Barack Obama on Saturday hailed congressional
approval of the $787 billion economic stimulus bill as a major
milestone in the country's economic recovery and the White House
said he would sign the legislation on Tuesday.
Obama's aides warned Americans Sunday not to expect instant
miracles from the bill but said it would help eventually.
Analysts see downside risks for oil, as economies struggle
through their worst recession in decades.
U.S. economic data due to be released on Tuesday include
manufacturing production in New York State and U.S. home builder
sentiment for February.
(Editing by James Jukwey)
