Oil Reverses Course on Economy Worries

Associated Press/AP Online

NEW YORK - Oil futures fell Friday as a rebound on Wall Street sputtered, reigniting energy investors' fears of a severe economic slowdown.

Stocks reversed earlier gains and fell as investors expressed disappointment in President Bush's economic stimulus plan, which includes $145 billion worth of proposed tax relief.

Energy investors sometimes view the stock market as a proxy for economic growth, so they were heartened earlier Friday when the Dow Jones industrials rose sharply, rebounding from Thursday's 306-point thrashing.

But dismal employment, housing and manufacturing data released in recent days remain fresh in the minds of traders who worry demand for oil and gas will fall. And the Conference Board said Friday its index of leading economic indicators slid 0.2 percent in December, more than the 0.1 percent decline analysts expected.

Light, sweet crude for February delivery fell 18 cents to $89.95 a barrel on the New York Mercantile Exchange. Earlier Friday, prices rose above $91.

However, concerns about the economy are balanced by a view that demand remains strong in the rest of the word, where economic growth does not appear to be slowing, said James Cordier, president of Liberty Trading Group in Tampa, Fla.

"Global demand ... is going to keep oil prices north of $85 (a barrel)," Cordier said.

Indeed, the International Energy Agency and the Energy Department both expect domestic demand for oil to slow this year while global demand remains strong.

At the pump, meanwhile, gas prices slid 1.1 cents overnight to a national average of $3.033 a gallon, according to AAA and the Oil Price Information Service. Retail gas prices, which typically lag the futures market, have retreated in recent weeks, following oil.

Other energy futures were mixed Friday. February heating oil futures fell 0.23 cent to $2.5012 a gallon on the Nymex while February gasoline futures rose 1.41 cents to $2.2809 a gallon. February natural gas fell 5.1 cents to $8.03 per 1,000 cubic feet.

In London, Brent crude for March delivery rose 15 cents to $88.90 a barrel on the ICE Futures exchange.

Associated Press writers Pablo Gorondi in Budapest and Gillian Wong in Singapore contributed to this report.

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