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The Canadian Press - ONLINE EDITION
Oil above $99 in Asia as weak US crude demand offsets improving overall economy
An oil pump works Monday, Sept. 13, 2010, in the desert oil fields of Sakhir, Bahrain. THE CANADIAN PRESS/AP, Hasan Jamali
SINGAPORE - Oil prices rose slightly higher to above US$99 a barrel Thursday in Asia as U.S. crude demand lags the overall improvement in the world's biggest economy.
Benchmark crude for March delivery was up 39 cents at $99.10 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 30 cents to settle at $98.71 on Wednesday.
Brent crude was up 35 cents to $117.55 a barrel on the ICE Futures Exchange in London.
Crude has hovered near $100 for the last few months as economic indicators, such as better than expected jobs data, suggests the U.S. economy is strengthening.
However, U.S. crude demand has been slower to pick up. The Energy Information Administration said Wednesday that U.S. petroleum demand fell by 4.8 per cent to a four-week average of 18.1 million barrels per day, the weakest four-week average since April 1997.
The EIA also reported that the U.S. crude supplies increased by 300,000 barrels last week.
"There is striking discrepancy between indicators of U.S. oil demand and indicators of the U.S. economic backdrop," Barclays Capital said in a report. "Our economists anticipate that the growth in overall activity to gently accelerate through the remainder of this year, which stands in stark contrast to recent oil demand readings from the U.S."
Improving crude demand in developing Asian countries, led by China and India, should help bolster prices, Barclays said.
"The problem with judging the global pace of oil demand growth is that the epicenter of that growth has most definitely moved away from the U.S. to Asia, and China in particular," Barclays said.
In other energy trading, heating oil was up 0.4 cent at $3.19 per gallon and gasoline futures added 1.2 cents to $2.99 per gallon. Natural gas fell 0.5 cent to $2.44 per 1,000 cubic feet.
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