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Published: Friday November 20, 2009 MYT 7:43:00 AM
Updated: Friday November 20, 2009 MYT 2:21:23 PM

Oil hovers below US$78 in Asia Fri


SINGAPORE: Oil prices hovered below $78 a barrel Friday in Asia as investors eyed a volatile U.S. dollar and mixed economic data.

Benchmark crude for December delivery was up 41 cents to $77.87 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange.

The contract, which expires later on Friday, gave up $2.12 to settle at $77.46 on Thursday.

Oil has seesawed between $76 a barrel and $82 for about a month as the dollar - whose fall this year has help boost crude prices from $32 in December - stabilized somewhat during the last few weeks.

Investors often buy commodities such as oil as a hedge against a weaker dollar and inflation.

The euro fell to $1.4912 from $1.4922 late Thursday in New York while the dollar slipped to 88.88 yen from 88.98.

"We view this sideways pattern as sustainable going forward through the balance of this year," said Galena, Illinois-based Ritterbusch and Associates said in a report.

"But, bearish oil fundamentals that are showing negligible sign of improvement will accentuate downside price moves in response to a strengthening dollar while dampening upside reaction to a weakening dollar."

On Thursday, the U.S. Labor Department said employers are still shedding jobs, and the Mortgage Bankers Association reported a surge in foreclosures.

However, some analysts expect Asian economic growth, led by China, to help offset a sluggish recovery in developed countries.

In other Nymex trading, heating oil rose 0.63 cents to $2.00 a gallon.

Gasoline for December delivery gained 0.56 cents to $1.98 a gallon.

Natural gas for December delivery was steady at $4.34 per 1,000 cubic feet.

In London, Brent crude for January delivery rose 40 cents to $78.04 on the ICE Futures exchange. - AP

Earlier report

Oil Prices down

NEW YORK: A global sell-off on equity markets dragged down crude prices by nearly 3 percent Thursday, the first decline this week.

The price for a barrel of crude dropped by more than $1 immediately when U.S. markets opened, with the Dow Jones industrials falling.

Markets in Asia and Europe fell early in the day.

Also pushing oil prices lower was a strengthening dollar.

Crude prices have risen steadily this year as the dollar lost value against the euro.

Because oil is bought and sold largely in dollars, someone holding euros can essentially by more crude for less.

Since the beginning of February, the dollar has lost more than 16 percent of its value against the euro.

On days when the dollar climbs, like Thursday when the U.S. currency gained a half cent against the euro, crude prices tend to fall.

Benchmark crude for December delivery gave up $2.12 to settle at $77.46 a barrel with one day remaining until the futures contract expires on the New York Mercantile Exchange.

Most of the trading already moved to the January contract, which lost $2.05 to settle at $78.05.

Still, with oil near $80 per barrel, consumers are starting to feel the pinch.

Leaders with the International Energy Agency in Paris, the U.S. Department of Energy, and even the Organization of Petroleum Exporting Countries have warned that rapidly rising energy prices could slow any economic rebound.

Since crude prices have soared, oil refiners have been shutting down facilities because they must pay higher prices for crude, but they can't make up those costs with higher gas prices.

Demand for gasoline, jet fuel and diesel, is dismal.

That has helped to send retail gas prices higher.

"Bottom line, the race is on; between falling demand and falling production," analyst Stephen Schork said.

"Regardless of the outcome, one result is almost guaranteed ... the consumer will lose. And, given that consumer spending is responsible for more than two-thirds of the U.S. economy, that does not bode well for the strength of the incipient recovery."

The Energy Information Administration also reported that natural gas stockpiles rose to a new record high last week, largely because industrial customers are using a lot less energy.

In other Nymex trading, heating oil fell 5.22 cents to settle at $1.9964 a gallon. Gasoline for December delivery lost 4.19 cents to settle at $1.9695 a gallon.

Natural gas for December delivery added 8.8 cents to settle at $4.342 per 1,000 cubic feet.

In London, Brent crude for January delivery gave up $1.83 to settle at $77.64 on the ICE Futures exchange. - AP


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