Oil Is Little Changed Amid Doubts Over Impact of Stimulus Plans

By Gavin Evans

Feb. 9 (Bloomberg) -- Crude oil traded little changed in New York amid doubts a $780 billion stimulus plan in the U.S. will lead to a rapid recovery in global energy demand.

Senate and Congress lawmakers due to vote on the plan today and tomorrow are more than “90 percent” agreed on its contents, Lawrence Summers, director of the National Economic Council, said yesterday. Stimulus packages won’t drag the global economy out of recession unless banking systems are also fixed, International Monetary Fund Managing Director Dominique Strauss- Kahn said.

Oil “could get up to the higher end of its range” once the U.S. stimulus plan is approved, Ben Barber, a broker with Bell Commodities Ltd. in Melbourne, said in a Bloomberg Television interview. “I really don’t see it breaking out above $60 a barrel until the markets sort of see a small glimmer of hope that this recovery is in place.”

Crude oil for March delivery was at $40.15 a barrel, down 2 cents, in after-hours electronic trading on the New York Mercantile Exchange at 8:30 a.m. in Sydney.

The contract traded between $38.60 and $42.68 last week and fell 2.4 percent to $40.17 a barrel on Feb. 6. Prices slumped as much as 6.2 percent that day after a report showed unemployment in the U.S. reached its highest since at least 1992.

The prospect of further production cuts by the Organization of Petroleum Exporting Countries and strike action in Nigeria, the fifth-largest supplier of oil to the U.S., failed to push crude beyond its recent trading range.

“There’s a lot of different things playing it from both sides,” Bell’s Barber said. “You’ve got the OPEC cuts and the global slowdown that is putting a lot of pressure on it.”

Price Plunge

New York oil futures have fallen 10 percent this year and are down 73 percent from the record $147.27 reached July 11 as a global recession cuts demand for oil and other commodities.

Advanced economies are already in a “depression” and “a lot of downside risk” remains, the IMF’s Strauss-Kahn said in Kuala Lumpur on Feb. 7.

Brent crude oil for March settlement fell 15 cents, or 0.3 percent, to $46.06 a barrel on London’s ICE Futures Europe exchange today. It fell 0.5 percent to $46.21 on Feb. 6.

OPEC pumps about 40 percent of the world’s oil and has cut daily output by 4.2 million barrels since September in a bid to prevent a glut and stem sliding prices.

OPEC will likely reduce production again next month in a bid to restore prices to $70 a barrel, Agence France-Presse reported Iraqi Oil Minister Hussain al-Shahristani as saying on Feb. 7.

Oil industry managers in Nigeria, OPEC’s seventh-largest producer, are due to start an indefinite strike today to protest attacks and abductions targeting oil installations.

To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net