Oil hovers near $80 on suggestion demand for crude will increase

Oil is approaching its high for 2009 of $82 a barrel on evidence the U.S. economy, the world's largest, is recovering.

By ALEX KENNEDY
The Associated Press

10/30/2009

SINGAPORE  — Oil prices hovered near $80 a barrel Friday in Asia after the U.S. economy snapped four straight quarters of contraction, suggesting demand for crude will improve.

Benchmark crude for December delivery was down 31 cents to $79.56 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $2.41 to settle at $79.87 on Thursday.

Oil is approaching its high for 2009 of $82 a barrel on evidence the U.S. economy, the world's largest, is recovering.

The Commerce Department said the U.S. economy grew at a 3.5 percent annual pace in the third quarter, the best showing in two years and breaking four straight quarters of declines.

The Dow Jones industrial average jumped 2.1 percent Thursday and all major Asian stock indexes rose in early trading Friday.

"The move higher in oil prices is, in our view, fundamentally justified," Barclays Capital said in a report. "On the macroeconomic front, so far the path of recovery has surprised to the upside."

In other Nymex trading, heating oil was steady at $2.05 a gallon. Gasoline for November delivery held at $2.02 a gallon. Natural gas for December delivery jumped 2.6 cents to settle at $5.09 per 1,000 cubic feet.

In London, Brent crude for December delivery fell 49 cents to $77.55 on the ICE Futures exchange.

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