Oil falls to near US$91 in Asia Friday(update)

SINGAPORE: Oil prices fell to near US$91 a barrel Friday in Asia as traders mulled whether demand in a slowly recovering U.S. economy will be enough to push crude above $100 soon.

Benchmark oil for February delivery fell 33 cents to $91.07 a barrel midday Singapore time in electronic trading on the New York Mercantile Exchange. Crude lost 46 cents to settle at $91.40 on Thursday.

The Labor Department said Thursday that more people filed for unemployment aid last week in the U.S., tempering optimism that a strong economic recovery is under way.

Some analysts expect the U.S. economy to stumble this year, undermining crude consumption and prices. Capital Economics forecasts oil prices will fall to $75 in 2011.

"Weaker than expected growth in final demand and a reversal of speculative pressures mean that industrial commodity prices are likely to fall at least 20 percent by the end of 2011 and further still in 2012," Capital Economics said in a report.

However, most economists - eyeing signs of improving U.S. crude demand joining still-strong consumption in emerging markets - expect oil to breach $100 this year.

"U.S. oil demand in the second half of last year finally began to show strong growth again," Morgan Stanley said in a report. "Importantly, we are still some way currently from the oil price challenging overall consumer spending."

Morgan Stanley is predicting oil will average $100 in 2011.

In other Nymex trading in February contracts, heating oil rose 0.8 cent to $2.62 a gallon while gasoline futures gained 1.1 cents to $2.46 per gallon. February natural gas futures was steady at $4.41 per 1,000 cubic feet.

In London, Brent crude was up 34 cents to $98.40 a barrel on the ICE Futures exchange. - AP

Earlier report

Oil hovers below US$92 a barrel

NEW YORK: Oil prices fell Thursday after briefly rising above US$92 a barrel as investors took profits following a report that showed a surprising jump in applications for unemployment benefits last week.

Benchmark oil for February delivery lost 46 cents to settle at $91.40 a barrel on the New York Mercantile Exchange.

The Labor Department report on jobs that showed more people filing for unemployment aid in the U.S. weighed on the dollar Thursday. The euro got a boost after successful bond auctions in Portugal and Italy helped calm some investors worried about Europe's debt crisis.

While the dollar slipped slightly against the euro on Thursday and in turn made crude cheaper for non-dollar investors, experts suggested factors outside the fundamentals of supply and demand could start to hamper oil prices.

"Although the momentum suggests a further rise in prices in the near term, there is still substantial downside potential for prices as soon as sentiment changes on the financial markets," Commerzbank said, while analysts at MF Global in New York listed rate hikes in emerging markets and a stronger dollar among the possible risks.

In other Nymex contracts for February delivery, heating oil fell 0.95 to settle at $2.6091 a gallon, and gasoline futures gave up 1.72 cents to settle at $2.4459 per gallon. Natural gas for March delivery fell 10.7 cents to settle at $4.419 per 1,000 cubic feet.

In London, Brent crude fell 28 cents to settle at $97.29 a barrel on the ICE Futures exchange. - AP

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