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Oil prices dive further on weak data

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LONDON, Feb 21 AFP

February 22 2013, 04:58AM

Global oil prices slid as traders worried over poor economic data, a potential end to US stimulus measures, and signs of weaker-than-expected American crude demand, analysts say.

Brent North Sea crude for delivery in April fell $US1.57 to $US114.03 a barrel in late Thursday afternoon deals in London.

New York's main contract, light sweet crude for April tumbled $US2.20 to $US93.02 per barrel.

The market accelerated earlier losses after downbeat reports on US jobs and European business activity which compounded concerns about flagging global demand for energy.

The US government's Labor Department said initial jobless claims rose to 362,000 in the week ending February 16, more than the analyst estimate of 358,000.

A Markit report on the eurozone business activity meanwhile showed its purchasing managers index (PMI) hit a two-month low at 47.3 in February, down from 48.6 the previous month.

Oil was already falling after minutes from the Federal Reserve's most recent meeting showed some members in favour of cutting short the $US85 billion-a-month bond-buying spree introduced last year to support the world's biggest economy.

The news, combined with speculation over a massive sell-off by an unnamed investment fund, had sent crude futures plunging by about $US2 on Wednesday.

"Investors are continuing to sell crude oil, along with risk assets in general, after the FOMC's last meeting minutes further confirmed fears that the Fed may withdraw or reduce QE sooner than had been expected," said analyst Fawad Razaqzada at GFT Markets.

"On top of this, economic data has been disappointing today, with those eurozone PMI figures and several US pointers missing expectations."

Meanwhile on Thursday, the US government's Department of Energy (DoE) announced that American crude inventories rose by 4.1 million barrels in the week ending February 15.

That was more than double market expectations for a gain of 1.7 million barrels, according to analysts polled by Dow Jones Newswires, and indicated weaker-than-expected demand in the world's biggest crude consuming nation.

The DoE report was published one day later than normal owing to a public holiday on Monday.

Crude futures were also pulled lower on Wednesday by speculation that major oil producer Saudi Arabia was mulling plans to lift production to meet strong demand from Asian powerhouse China, analysts said.

The market also slid on news that global powers were ready to make key oil producer Iran an offer over their long-running dispute with Tehran.