Oil tumbles in Asian trade on economic concerns

I / Singapore January 18, 2010, 10:20 IST

Oil fell in Asian trade today as economic concerns continued to weigh on investor sentiment, analysts said.

New York's main contract, light sweet crude for February delivery fell 70 cents to $77.30 a barrel.

Brent North Sea crude for February delivery was down 71 cents to $76.40.

"Oil is under pressure primarily from economic considerations," said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.

"Some of the economic data out of the US were not really robust and so these data raised doubts about the health of the US consumer and the strength of the US economy."

The US is the world's biggest energy consumer and global demand for oil has been affected to a large degree by the US economic slowdown.

Data released Friday showed US consumer prices barely rose in December and was interpreted by economists as a sign of lingering weakness in the economy, where consumer spending is a major driver of economic activity.

"The US is still in the grip of intense disinflationary forces, despite the basis effect lifting the headline year-on-year rate. Deflation risk is real," said Ian Shepherdson, chief US economist at High Frequency Economics.

Meanwhile, the International Energy Agency on Friday said oil demand in 2010 would be "sluggish" in the developed world, with emerging markets accounting for any increases.