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Oil hovers below $83 in Asia amid markets turmoil

Oil hovers below $83 in Asia amid markets turmoil

August 11th, 2011 by ALEX KENNEDY, Associated Press in News

SINGAPORE (AP) - Oil prices hovered below $83 a barrel Thursday in Asia as investors mulled how much weakening economic growth in the U.S. and Europe could undermine global crude demand.

Benchmark oil for September delivery was down 33 cents to $82.56 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. Crude rose $3.59, or 4.5 percent, to settle at $82.89 on Wednesday.

In London, Brent crude was down 24 cents to $106.44 per barrel on the ICE Futures exchange.

Traders are trying to gauge the impact plunging equity and commodities prices could have on economic growth and demand for crude. Oil investors usually look to stock markets as a barometer of overall investor sentiment, but crude rallied Wednesday despite a 4.6 percent fall in the Dow Jones industrial average.

Asia stocks were mostly lower Thursday but fell much less than Wall Street.

Oil prices, which have fallen about 29 percent since May, were bolstered Wednesday by an unexpected drop in U.S. crude supplies, suggesting demand may be improving. The Energy Department's Energy Information Administration said that crude inventories fell last week by 5.2 million barrels while analysts had estimated that supplies would rise by almost 2 million barrels.

"This was one of the most bullish reports we have seen this year," energy analyst and trader Blue Ocean Brokerage said in a report. "Those are some pretty hearty numbers for an economy that is supposedly in the midst of another double-dip recession."

Earlier this week, the International Energy Agency and OPEC cut their outlooks for global oil demand growth this year. However, both groups expect demand to rise next year.

In other Nymex trading in September contracts, heating oil fell 1.2 cents to $2.85 a gallon while gasoline dropped 0.8 cent at $2.77 a gallon. Natural gas futures advanced 0.4 cent at $4.00 per 1,000 cubic feet.