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Oil continues its bearish skid

OIL prices fell to below US$35 a barrel yesterday as investors eyed a slew of US corporate earnings this week for signs of weakening consumer demand amid the worst recession in decades.

Other geopolitical factors also were seen as bearish for prices.

"The easing of the conflict in Gaza and the promise of a signed resolution of the Russian-Ukraine gas supply dispute may weigh on price sentiment already subdued by the weight of lower demand forecasts," said a report from Sucden Financial Research in London.

Investors expect to gain more insight into the extent of the current downturn when hundreds of companies report fourth-quarter results this week, including heavyweights Google and General Electric Co.

Investors are bracing for bad numbers after banking giant Citigroup last Friday said it lost US$8.29 billion in the fourth quarter and that it was splitting in two to help restore profits.

Concern that a recession in developed countries may be worse than previously expected - and that it's eating away at demand for oil - has sent crude prices down about 30 percent from US$50.47 a barrel earlier this month and down about 75 percent from US$147.27 in July.

"In the short term, demand is collapsing and the price is going to fall," said Richard Urwin, who helps manage more than US$10 billion of stocks, bonds and other investments for BlackRock in London. "The risks for the moment are on the downside."

The Organization of Petroleum Exporting Countries has announced production cuts of 4.2 million barrels a day since September. But many investors are worried the cuts won't be enough as demand from around the world evaporates.


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