Oil falls to near $77 amid mixed demand signs

By ALEX KENNEDY

posted: 1 HOUR 23 MINUTES AGO

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SINGAPORE -Oil prices fell to near $77 a barrel Thursday in Asia amid mixed indications about the strength of global crude demand.

Benchmark crude for January delivery was down 79 cents to $77.17 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.94 to settle at $77.96 on Wednesday.

Trading is closed Thursday in the U.S. for the Thanksgiving holiday.

After zooming to $147 a barrel in July 2008 and crashing to $32 in December, oil prices have meandered in the high $70s for more than a month as investors weigh a slow U.S. recovery against surging Asian demand.

A weakening dollar has helped support crude prices as investors look to commodities as a hedge against inflation. On days the dollar weakens, oil usually rises though the relationship doesn't always hold.

On Thursday, dollar dived to a 14-year low of 86.27 yen from 87.35 the day before. The euro, which hit a 15-month high against the dollar Wednesday, slipped to $1.5083 from $1.5132.

The Energy Information Administration said Wednesday that crude supplies rose 1.0 million barrels while analysts had expected a rise of 1.4 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Crude inventories are up 17 million barrels from a year ago.

Demand from China, however, has grown in the last two months at its fastest pace in five years as analysts forecast 10 percent economic growth in the fourth quarter.

"The recent data mark a significant acceleration in Chinese demand," Barclays Capital said in a report. It predicts oil will average $85 a barrel next year and $137 in 2015.

In other Nymex trading, heating oil fell 2.56 cents to $1.9645 a gallon. Gasoline for December delivery dropped 2.76 cents to $1.97 a gallon. Natural gas for January delivery slid 7.3 cents to $5.09 per 1,000 cubic feet.

In London, Brent crude for January delivery fell 59 cents to $77.85 on the ICE Futures exchange.

2009-11-26 04:01:06