Oil hovers below US$99 in Asia Friday(update)

by **hlk** Fri 08 Jul 2011, 20:02

SINGAPORE: Oil prices hovered below US$99 a barrel Friday in Asia ahead of key jobs data from June that could shed light on the strength of the U.S. economy.

Benchmark oil for August delivery was down 13 cents to $98.54 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. Crude rose $2.02 to settle at $98.67 on Thursday.

In London, Brent crude was steady at $118.59 per barrel on the ICE Futures exchange.

Traders will be closely eyeing the Labor Department's monthly employment report before the U.S. market opens later Friday. Economists estimate the unemployment rate will remain at 9.1 percent and that employers added 90,000 jobs last month.

On Thursday, the department said the number of Americans who applied for unemployment benefits fell last week to the lowest level in seven weeks. Payroll processor ADP said the private sector added 157,000 jobs last month, which was more than double what economists had forecast.

"The employment figures were encouraging," Cameron Hanover said in a report. "This market now has such powerful upward momentum behind it that everything is coming up bullish."

"Low interest rates are enough of a reason to buy commodities. Oil is the market darling now."

Oil dropped to $90 last week after the U.S. and other nations in the International Energy Agency said a week earlier that they will release 60 million barrels of crude from emergency stocks. But crude has rebounded on expectations global supplies will tighten and demand will improve during the next 18 months.

"It took just five days for the market to shrug off the 60 million barrel stock release," J.P. Morgan said in a report. "There is no supply cushion to fall back on. The upside price risks to 2012 have materially increased."

J.P. Morgan said it raised its forecast for the average crude price in the fourth quarter of next year to $120 from $110.

In other Nymex trading in August contracts, heating oil fell 0.7 cents to $3.10 a gallon while gasoline slid 1.6 cents at $3.11 a gallon. Natural gas futures added 2.3 cents at $4.16 per 1,000 cubic feet. - AP

Earlier report

NEW YORK: A funny thing happened on the way to lower oil and gasoline prices: They went up.

Two weeks after the U.S. and other oil-importing nations took action that knocked down the price of oil to almost $90 a barrel, it's back around $100.

Oil is rising again as investors bet that the economies of many countries, including the U.S., will improve in the second half of the year, and global demand for petroleum will rise.

Benchmark oil for August delivery rose $2.02, or 2.1 percent, to settle at $98.67 a barrel on the New York Mercantile Exchange. Brent crude gained $4.97, or 4.4 percent, to settle at $118.59 per barrel on the ICE Futures exchange.

Higher oil prices mean higher gas prices. The U.S. average pump price rose 1.4 cents on Thursday to $3.583 a gallon (94 cents a liter), according to automobile club AAA and the Oil Price Information Service. That's up 86 cents a gallon from a year ago.

Gas prices likely will remain choppy, rising or falling within a 20-cent range for the rest of the summer, according to Oil Price Information Service analyst Tom Kloza. They probably won't push back to near $4 a gallon, where they were in early May, barring floods or hurricanes that could affect refinery operations.

While most experts agree that the world has plenty of oil, there are concerns that supplies could get tight as demand rises. The U.S. and other nations in the International Energy Agency have said they will release 60 million barrels of crude from emergency stocks to cover possible shortfalls caused by the shutdown of Libyan oil production because of ongoing unrest there. Libya supplied about 2 percent of the world's oil, much of it high-grade crude used for refined products like gasoline.

Benchmark oil fell as low as $90.61 a barrel at the end of June following the IEA announcement. It then began a steady climb, as investors shrugged off the IEA move and focused on the prospect of growing demand in the second half of the year, especially in the expanding economies of China, India and Brazil.

There are also more positive signs in the U.S. economy that could point to more jobs and more energy consumption.

The Labor Department said Thursday that the number of Americans who applied for unemployment benefits fell last week to the lowest level in seven weeks. Payroll processor ADP said the private sector added 157,000 jobs last month, which was more than double what economists had forecast.

In addition, U.S. factory orders rose 0.8 percent in May to $445.3 billion, which was almost 32 percent higher than the low point during the recession, reached in March 2009.

In other Nymex trading for August contracts, heating oil rose 13.87 cents to settle at $3.1020 per gallon and gasoline futures added 12.94 cents to settle at $3.1270 per gallon. Natural gas lost 8.4 cents to settle at $4.138 per 1,000 cubic feet. - AP