Oil ends the week around US$58 on signs of weakness in US economy

18-May-09

The US Labor Department reported that new jobless claims rose to a seasonally adjusted 637,000 last week, above analysts' expectations of 610,000. Continuing jobless claims rose to 6.56 mln from 6.36 mln- higher than analysts expectation. Reports this week of retail sales, unemployment and housing in USA have traders reconsidering their outlook for the economy. Oil prices have ended the week at US$58 on signs of economic weakness in USA as well as Europe leading to speculation whether this month's crude rally was justified. Earlier this week, oil prices spiked past US$60 a barrel on optimism of the beginning of the end of the US recession. Along with US, reports from Europe showed the euro zone economy shrank by 2.5% in Q1. Germany, the region's biggest economy, was particularly badly hit. Accounting for a third of eurozone output, Germany contracted 3.8% in Q3. Will these fresh reports push back oil prices to US$50? International Energy Agency has reduced forecast of global oil consumption for a ninth consecutive month and with expectation that demand could 3% in 2009- about 2.6 mln bpd fewer than last year.