Oil hovers near $42 as US crude workers may strike

Oil futures rose near $42 a barrel on Monday, buoyed by threats of major strikes by refinery workers in the United States and Britain, but the gains were tempered by concerns of sagging global energy demand. Signs from OPEC late last week that it may augment its record output cuts to stem the collapse of more than $100 in prices, and an abrupt end to a ceasefire in Nigeria's oil-rich Niger delta also supported prices, analysts said. U.S. Oil prices were also bolstered after Nigeria's main militant group warned of a "sweeping assault" on the country's oil and gas industry on Friday, saying it was calling off a ceasefire after a military strike on one of its camps,reported Reuters.

"The slew of economic and oil demand data which came out of the U.S. last week was all pretty negative energy demand outlook," said David Moore, a commodity analyst at the Commonwealth Bank of Australia.” But threats of refinery strikes on both sides of the Atlantic are probably giving oil some support", he further added. A report from the U.S. Energy Information Administration on Friday showed U.S. oil demand in November was 305,000 barrels per day less than previously estimated and was down 1.577 million bpd from a year earlier. Data also showed U.S. gross domestic product fell at a 3.8 percent annual rate in the fourth quarter, the biggest drop since the first three months of 1982.


In Britain, Prime Minister Gordon Brown on Sunday condemned nationwide wildcat strikes over the use of foreign workers, but unions warned more staff may down tools this week. But fears of a deep global recession and a tumble in world energy consumption continue to unsettle investors.

OPEC secretary general Abdullah al-Badri said on Friday the producer group was willing to cut output further at its meeting in March, adding to agreed cuts of 4.2 million barrels per day since September to prop up prices.OPEC secretary- general, said $70 to $90 a barrel is a “reasonable” oil price to support investment in new production.“It’s a reasonable price where we can invest and that’s the most important thing for the world...We control 75 to 80 percent of the world reserves, we need to develop that reserve so we can have more supply to the world" he added.