Oil prices have dipped further on release of a report that points to signs of economic weakness signaled a slowdown in demand. US crude for February delivery have dropped to US$41.70. Prices fell by almost $6 on Wednesday, when a report revealed larger-than-expected supply buildup.
The Labor Department reports that 467,000 people filed for unemployment benefits last week, which was fewer than expected, but still much higher than the 330,000 claims filed in the same week a year ago. A 6.7 mln barrel gain in crude stockpiles for the week ended January 2 also signal deeply weakened demand.
On the supply side, OPEC has pledged to reduce oil supplies by 2.2 mln bpd. In a bd to meet its OPEC quota, Venezuela's state-owned oil company cut production by 189,000 bpd. Venezuela will also be reducing shipments of crude oil to refiners in the US, particularly to the Chalmette Refinery in Louisiana, operated by ExxonMobil and ConocoPhillips' Sweeny Refinery in Texas.