KEY POINTS:
LONDON - Oil fell for the fourth consecutive day today and touched a fresh 19-month low after Russian exports through a pipeline to Europe restarted.
The resumption of the flow added momentum to a rush of selling after US crude crashed through key technical support at US$55 yesterday
on a sharp rise in fuel stocks in the world's number one consumer.
US light crude was down 42 cents at US$53.60 a barrel at 1730 GMT, after earlier dipping under US$53 for the first time since June 2005.
London Brent crude was down 40 cents at US$53.29.
Russia resumed pumping today through its Druzhba pipeline to Central Europe, ending a three-day halt that had stopped a tenth of Europe's oil supplies.
An unusually warm winter in the United States had triggered a wave of selling from speculators that has taken as much as 13 per cent off the price of a barrel of oil already this year.
Analysts said the slide was out of proportion to any fundamental weakness in oil markets, as investors bet on more falls and prices crashed through one after another technical support levels.
"The price move is exaggerated," said Kevin Norrish of Barclays Capital. "The catalyst was the warm weather, the selling broke down key support levels, and it has been technical selling ever since."
FUNDS
Financial funds appear to have sunk less money in oil this year than some speculators had expected, analysts said. Investors that had bet on a repeat of the huge fund flows into the market of early 2006 have been disappointed.
"The effect of the reweighing (of funds) was exaggerated and if people had positioned ahead of it they may have been liquidating," Norrish said.
But the sell-off could be running out of steam, Olivier Jakob at Petromatrix said on Thursday.
"There could still be more losses ahead, but if funds that still have long positions are liquidating that could be a flag that maybe finally this fall could slow," he said.
Opec President Mohammed al-Hamli told Reuters today that the group was very concerned about the sharp fall and will take further action to stabilise the market if needed, but said there had been no decision on holding an emergency meeting.
"We are monitoring the market on a daily basis. The price drop is a big concern," Hamli, also the energy minister of the United Arab Emirates, told Reuters in a telephone interview.
He said markets were oversupplied and that high global fuel inventories could carry on rising in the second quarter if the mild weather continued.
Opec's top producer, Saudi Arabia, told Asian refiners today that it will reduce exports in February, in line with Opec's agreement to cut supply from Feb. 1.
- REUTERS
