Michael Galvis: Oil Falls Due To Week Economy

LONDON (Reuters) — Oil in New York fell below $37 a barrel on Tuesday as bleak economic indicators turned the focus back to the worldwide slump in demand, outweighing lower supplies due to OPEC cutbacks.

A Reuters poll showed confidence among Japanese manufacturers remained near record lows. That came a day after data showing the country’s economy shrank by the most in 35 years.

“The economic outlook will continue to dominate the first half of 2009. The United States, eurozone and Japan are in synchronized recession,” said Harry Tchilinguirian, oil analyst at BNP Paribas.

OPEC supply cuts are only going to impact consuming country inventories with a lag,” he added.

U.S. crude for March delivery fell to $36.88 a barrel, 63 cents off last Friday’s settlement.

The New York Mercantile Exchange did not print a settlement price on Monday as its trading floor was closed for Presidents Day, although electronic trading continued as usual. The floor will reopen on Tuesday.

U.S. crude for March expires on Friday and it was trading at a $3.70 discount to April due to high inventories at the storage hub in Cushing, Oklahoma. Brimming U.S. stocks are also keeping U.S. crude at an atypical discount to Brent.

World oil demand has fallen in the last few months as recession triggered by the banking crisis spreads through all continents. Oil has collapsed from a record high above $147 reached last year.

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