WTI, Brent see declines on demand worries

Crude oil prices dropped below $35 per barrel in New York and lost more than $2 per barrel in London trade as investors worried that the recession will not only continue but deepen before it gets better.

Sentiment is that demand will continue to decline, while bad news on manufacturing in the New York region hurt prices, which have dropped 22 percent since the beginning of the year.

Poor results for the day on equities markets also pushed prices lower, as did new data showing that Japan’s economy contracted by 3.3 percent in the fourth quarter and bad news on profits from discount retailer Wal-Mart (NYSE: WMT).

March contracts for West Texas Intermediate crude was down $2.58 to $34.93 per barrel on the New York Mercantile Exchange, while Brent crude for March delivery dropped $2.14 to $41.14 per barrel on the ICE Futures Europe exchange in London.

Nymex March unleaded gasoline and April heating oil futures each dropped 8 cents during the session, to $1.13 per gallon and $1.22 per gallon respectively, while April natural gas was down 20 cents to $4.26 per million British thermal units.

The retail prices of gasoline in the United States fell 0.5 cent overnight to $1.96 per gallon on average, according to AAA.