Oil around $41 amid grim economic news

VIENNA, Austria-Dismal global economic news pointing to deteriorating energy demand kept oil prices in check Wednesday, with crude oscillating around $41 a barrel.The market continued to focus on bad news from the banking sector, with investors concerned that a deepening global slowdown will further undermine demand for crude. But indications that OPEC was showing unusual discipline in taking extra barrels off the market gave prices some lift, along with renewed oil-related violence in Nigeria.After seesawing in earlier trading, light, sweet crude for March delivery was up 74 cents at $41.58 a barrel by afertnoon in Europe in electronic trading on the New York Mercantile Exchange. The contract fell $1.53 overnight to settle at $40.84.The February contract, which expired Tuesday, rose $2.23 to settle at $38.74 a barrel.Prices headed south Tuesday after the Royal Bank of Scotland said its losses for last year could top $41 billion, which would be the biggest loss ever for a British corporation.The British government injected more money into the struggling bank Monday and announced plans for another round of bailouts for the country's banks.U.S. banks State Street and Regions Financial Corp. also reported big earnings drops Tuesday.The Dow Jones industrial index, which oil traders look to as a barometer of investor sentiment about the economy, fell 4 percent Tuesday."It's really getting ugly on the economic side," said Christoffer Moltke-Leth, head of sales trading for Saxo Capital Markets in Singapore. "There is nothing to support crude in the fundamentals."Trader and analyst Stephen Schork suggested price pressures were here to stay, at least in the short term."After a strong start to 2009 ... prices ... have since collapsed," he said in his Schork Report. "We do not expect this trend to change."The deteriorating global economic outlook means forecasts for crude demand are being slashed.The International Energy Agency on Friday cut its global oil demand forecast by one million barrels a day to 85.3 million. The IEA said it expected 2009 world crude demand to drop 0.6 percent after falling 0.3 percent last year. Its forecast assumes global economic growth of 1.2 percent this year."We wouldn't be surprised to see Japan in a severe recession for at least 3 years and the U.S. could easily be in recession for 2 years, and after that a very slow recovery," Moltke-Leth said....
Associated Press writer Alex Kennedy contributed to this report from Singapore.
By GEORGE JAHN, Associated Press Writer
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