Oil drops below $78 per barrel

Oil extended its losing streak Monday, slipping below $78 a barrel in Asia amid declines in stock markets.

Benchmark crude for February delivery fell was down 25 cents to $77.75 a barrel at early afternoon Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. On Friday, the contract slid $1.39 to settle at $78. The price was down $4.75 for the week after declining for five straight days.

Major stock markets in Asia such as Japan and Hong Kong were down Monday following Friday’s decline on Wall Street where rising loan losses at JPMorgan Chase & Co. sparked concerns about profits at other big banks. Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., Morgan Stanley and Wells Fargo & Co. are expected to post results this week.

“We see a downward pressure on oil. The corporate earnings results so far have not really indicated much revenue growth and that points to continued weakness in the U.S. economy,” said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.

Shum said the recent cold weather in the U.S. has failed to sharply reduce oil inventories and the frigid spell is now easing, which will detract from demand for oil.

Oil prices may slide further but Shum said bargain hunting is likely to stem the fall at the mid $70s level. If the bank earnings are strong, the mood could also turn around quickly, he said.

In other Nymex trading in February contracts, heating oil fell 0.38 cent to $2.04 a gallon and gasoline was little changed at $2.046 a gallon. Natural gas futures shed 3.6 cents to $5.655.

In London, Brent crude for March delivery fell 35 cents to $76.76 a barrel on the ICE Futures exchange.

Source: AP