Published: Friday August 28, 2009 MYT 7:40:00 AM
Updated: Friday August 28, 2009 MYT 2:36:16 PM

Oil prices rise slightly in Asia Friday (update)

BANGKOK: Oil prices rose slightly Friday in Asia, hovering above US$72 as investors nurtured doubts about a sustainable recovery in the world's biggest economy.

Benchmark crude for October delivery was up 10 cents to $72.59 a barrel by late morning Bangkok time in electronic trading on the New York Mercantile Exchange.

The contract Thursday added $1.06 to settle at $72.49 after tumbling from near $75 earlier in the week.

Reflecting the dire state of energy demand, natural gas prices slumped to their lowest level in seven years Thursday after the U.S. government reported that salt caverns, aquifers and other underground areas where it is stored are filling up.

Levels of natural gas have been building because power-intense industries like manufacturing have cut back severely on production.

Crude posted gains because of a fall in the dollar which means investors can get more crude for less money.

Yet some analysts say the oil price is bound to fall in coming weeks as earlier euphoria about the global economy emerging from recession gives way to doubts about how sustainable the recovery is.

Existing weakness in demand will also be exacerbated by the seasonal drop in gasoline consumption when the U.S. summer driving season ends in a few weeks time.

"We have seen this strength (in the oil price) which reflected renewed confidence in the economy," said John Vautrain, energy analyst at consultancy Purvin & Gertz in Singapore.

"But in the last week or so people are starting to say that the stock market is overbought and the data is not that good."

In other Nymex trading, gasoline for September delivery was barely changed at $2.032 a gallon and heating oil rose 0.2 cent to $1.8612 a gallon.

In London, Brent crude was down 1 cent at $72.50. - AP

Earlier report

Gas prices at new 7-year low, oil higher

NEW YORK: Natural gas prices slumped to their lowest level in seven years Thursday after the government reported that salt caverns, aquifers and other underground areas where it is stored are filling up.

Levels of natural gas have been building because power-intense industries like manufacturing have cut back severely on production.

Natural gas tumbled 6.7 cents to settle at $2.843 per 1,000 cubic feet.

The price dropped as low as $2.692 per 1,000 cubic feet earlier in the day, a price not seen since Aug. 7, 2002.

The contract is scheduled to end Thursday, however, and most of the trading already has switched to the October contract that gave up 4.6 cents to trade at $3.248.

Meanwhile, crude and gasoline futures were tugged higher as equities markets rose and the dollar fell among other major currencies.

Benchmark crude for October delivery added $1.06 to settle at $72.49 a barrel on the New York Mercantile Exchange.

Still, oil prices have been tumbling since they touched $75 a barrel on Tuesday, and analysts said they expect it will fall further as the summer driving season ends in a few weeks.

Retail gas prices peaked in late June at around $2.69 per gallon and have been falling slowly since, giving consumers a bit of a break in the tough economy.

Gas prices gave up two-tenths of a penny to $2.62 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

A gallon of regular gasoline is 11.5 cents more expensive than last month, but it's $1.047 cheaper than the same time last year.

Oil remains above $70, largely because it is bought in the U.S. dollar.

That means when the dollar falls, like it did Thursday, investors can get more crude for less money. Crude supplies grow this week, however, and they remain well above seasonal norms.

"It's getting harder and harder to justify it at these prices," PFGBest analyst Phil Flynn said.

Natural gas prices plunged early in the day when the Energy Information Administration reported that natural gas placed into storage surged again.

There is so much natural gas in storage, it has begun to test the country's storage capacity.

But EIA economist Jose Villar told The Associated Press that storage facilities have added about 100 billion cubic feet of extra space, giving suppliers more places to put it.

The EIA will include details of the added capacity in a report to be published in the next few weeks, Villar said.

In other Nymex trading, gasoline for September delivery increased 4.88 cents to settle at $2.0314 a gallon and heating oil added less than a penny to settle at $1.8592 a gallon. In London, Brent crude rose 86 cents to settle at $72.51. - AP

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