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Published: Wednesday September 1, 2010 MYT 7:26:00 AM
Updated: Wednesday September 1, 2010 MYT 4:24:27 PM

Oil creeps above US$72 in Asia Wednesday(update)

SINGAPORE: Oil prices rose slightly to above US$72 a barrel Wednesday in Asia after a steep drop the previous day amid evidence that U.S. crude supplies remain high and demand weak.

Benchmark crude for October delivery was up 34 cents to $72.26 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange.

The contract lost $2.78 to settle at $71.92 on Tuesday.

Crude inventories jumped 4.7 million barrels last week, the American Petroleum Institute said late Tuesday.

Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had forecast an increase of 1.9 million barrels. Inventories of gasoline and distillates fell, the API said.

The Energy Department's Energy Information Administration reports its weekly supply data later Wednesday.

Oil has traded mostly in the $70s for the past year amid investor concerns the economic recovery from last year's recession in developed countries may peter out once massive stimulus spending fades. High crude inventories in the U.S. suggest consumer demand remains sluggish.

"The fundamentals are dreadful to the point of being historically among the worst supply and demand factors ever seen," Cameron Hanover said in a report.

In other Nymex trading in September contracts, heating oil rose 1.33 cents to $2.005 a gallon and gasoline gained 0.96 cent to $1.867 a gallon.

Natural gas for October delivery fell 3.3 cents to $3.783 per 1,000 cubic feet. Brent crude was up 46 cents at $75.10 a barrel on the ICE futures exchange. - AP

Earlier report

Oil prices fall as US economy still looks shaky

NEW YORK: Some of the economic news was a little better on Tuesday, but it was not enough to keep oil prices from dropping again.

Benchmark crude for October delivery lost US$2.78 to settle at US$71.92 a barrel on the New York Mercantile Exchange.

The Conference Board said its Consumer Confidence Index now stands at 53.5, up from 51.0 in July.

Still, consumer confidence is far below the 90 reading that would indicate a healthy economy.

In addition, the Standard & Poor's/Case-Shiller 20-city home price index rose 1 percent in June from May and 4.2 percent from a year ago. However, home prices are expected to fall for the rest of the year.

Stocks fell Tuesday afternoon after release of the Fed's August meeting minutes, which showed the central bank would consider more measures to boost the U.S. economy, if a program to buy government debt didn't work. The Dow Jones Industrial Average was about 10 points lower.

The Nasdaq and the S&P 500 down a little as well. Traders have kept an eye on stocks for signs about the direction of the economic recovery.

"Oil continues to spend much of its time trailing the stock market," analysts at Ritterbusch and Associates said in a report.

Many traders are awaiting August's unemployment data, due Friday, to get a better handle on the economy as well.

"Every bit of news will bump the market in one or the other direction," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

Energy prices also pulled back after forecasters said Hurricane Earl turned toward the East Coast of the U.S. and away from oil and gas operations in the Gulf of Mexico.

Big storms rolling through the Gulf can interrupt production and raise prices.

"Some of that premium is being taken out of the market," Lind-Waldock senior market analyst Rich Ilczyszyn said.

The Energy Department releases its weekly report on petroleum supplies on Wednesday. Analysts expect it to show that crude oil inventories continue to expand because of weak demand.

In other Nymex trading in September contracts, heating oil fell 3.03 cents to settle at $1.9944 a gallon and gasoline slid by 4.47 cents to $1.8894 a gallon.

Natural gas for October delivery added 0.4 cent to $3.816 per 1,000 cubic feet.

In London, Brent crude was down $1.96 to settle at $74.64 a barrel on the ICE Futures exchange. - AP

Latest business news from AP-Wire

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