Published: Friday September 18, 2009 MYT 7:36:00 AM
Updated: Friday September 18, 2009 MYT 2:20:08 PM

Oil lower Friday on concerns economic recovery slow(update)

KUALA LUMPUR: Oil prices weakened Friday in Asia, dampened by concerns that a recovery in the U.S. economy may be slower than expected.

Benchmark crude for October delivery fell 29 cents to $72.18 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange.

The contract fell 3 cents to settle at $72.47 on Thursday.

Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore, said oil prices pulled back in tandem with a slide in regional stock markets and a stronger U.S. dollar.

The moves followed new U.S. government data indicating a slow economic recovery, which may mean less demand for energy by the world's largest crude user in the near term.

"There is a supply overhang in both crude oil and products. Oil pricing at a $70 plus level is quite vulnerable given the weak fundamentals," Shum said.

The recession has sapped American fuel consumption, and U.S. oil stockpiles are 14 percent larger than last year.

The Energy Information Administration said Wednesday that the country also is sitting on a sea of distillate fuels including heating oil, with stockpiles approaching a 27-year high.

The government reported Thursday that natural gas stockpiles continue to grow as well and are now at 16.4 percent above the five-year average for this time of year.

There are some bright spots.

The Labor Department said new claims for unemployment benefits fell to the lowest level since July.

And the Commerce Department said housing construction in August surged to the highest level in nine months with a flurry of new apartment building projects.

While on the surface that would suggest energy consumption may rebound, the jobless numbers however, are far below levels that would indicate a healthy economy.

Shum said oil has traded within the $65-$75 a barrel since July and likely to stay within this range in the coming months.

In other Nymex trading, gasoline for October delivery slipped 0.47 cent to $1.8465 a gallon, and heating oil dipped 0.61 cent to $1.8348 a gallon.

Natural gas rose 6.2 cents to $3.52 per 1,000 cubic feet.

In London, Brent crude fell 16 cents to $71.39. - AP

Earlier report

NEW YORK: Oil prices edged lower on new government data that indicated a slow economic recovery.

That would mean less demand for energy in the near term and potentially low-priced gasoline and heating gas for some time.

Benchmark crude for October delivery slipped 3 cents to settle at $72.47 a barrel on the New York Mercantile Exchange.

Prices crested at $73.16 a barrel in morning trading, the highest that crude has reached this month.

At the pump, retail gas prices dropped nearly a penny overnight to a new national average of $2.55 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

Gas prices are now falling away from the peaks reached in June at the outset of the driving season, when a gallon hit $2.69.

A gallon of regular gas is already 8.4 cents cheaper than last month at this time and $1.305 cheaper than a year ago.

Anxiety over the economy and job security curtailed traffic even during summer holiday weekends when people usually travel longer distances from home.

The Labor Department said new claims for unemployment benefits fell to the lowest level since early July.

And the Commerce Department said housing construction in August surged to the highest level in nine months with a flurry of new apartment building projects around the country.

While on the surface that would suggest energy consumption may rebound, the jobless numbers are far below levels that would indicate a healthy economy.

And there is still an enormous amount of crude, gasoline and natural gas in storage.

The recession sapped American fuel consumption, and U.S. oil stockpiles are 14 percent larger than last year.

The Energy Information Administration said Wednesday that the country also is sitting on a sea of distillate fuels including heating oil, with stockpiles approaching a 27-year high.

The government reported Thursday that natural gas stockpiles continue to grow as well and are now at 16.4 percent above the five-year average for this time of year.

Natural gas lost 25.2 cents to settle at $3.458 per 1,000 cubic feet.

Natural gas prices have been spiking all week and remain 17 percent higher than Monday's opening price.

Prices had fallen to seven-year lows this month, which may have attracted investors seeking a bargain.

In other Nymex trading, gasoline for October delivery rose less than a penny to settle at $1.8512 a gallon, and heating oil rose by less 1.5 cents to settle at $1.8409 a gallon.

In London, Brent crude gave up 12 cents to settle at $71.55 a barrel on the ICE Futures exchange. - AP

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