Oil prices tumble after China disappoints

March 6, 2009
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, NEW YORK, March  6 – Oil prices slid on Thursday as investors appeared dismayed that China, the biggest energy consumer after the United States, did not deliver new hoped-for stimulus measures.

New York\’s main futures contract, light sweet crude for April, fell 1.77 dollars to close at 43.61 dollars a barrel.

The New York contract fell after rising for the past two sessions, including a nearly four-dollar surge as markets buzzed in anticipation of an imminent stimulus announcement by China that did not materialize.

In London, Brent North Sea crude for delivery in April dropped 2.48 dollars to settle at 43.64 dollars a barrel.

"The market was hyped up on hopes that Chinese Premier Wen Jiabao would dazzle us with a stimulating stimulus plan," said Phil Flynn at Alaron Trading.

Wen "disappointed the bulls by promising that China\’s economy would grow despite the global slowdown but did not announce any addition to the nation\’s (585-billion-dollar) stimulus plan."

The market\’s disappointment over China was mirrored in stock market falls around the world, where sentiment also took a hit from another round of bad economic and business news.

Both the Bank of England and the European Central Bank slashed interest rates to record lows. The ECB hinted that more cuts could be in the pipeline as new official data showed the eurozone economy shrank for a third consecutive quarter in the fourth quarter, by a record 1.5 percent.

Analysts said dealers were bracing for Friday\’s US government report on February employment.

According to weekly initial claims for unemployment benefits released Thursday, the number of unemployed US workers remained at nearly 26-year highs.

"Anticipating another 600,000-700,000 of job losses in tomorrow\’s nonfarm payrolls report and the inferences it carries for energy demand has already led some participants to shed length," said Mike Fitzpatrick at MF Global.

"So, heading in to week\’s end, a rising dollar as a consequence of interest rate cuts in Europe and anticipation of a poor jobs report tomorrow should keep crude prices under pressure."

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