Oil hovers near $103 amid EU economy worries
Some analysts are optimistic that crude demand in the U.S. and China, the world's two largest oil consumers, is about to rebound.
By ALEX KENNEDY
The Associated Press
SINGAPORE — Oil prices hovered near $103 a barrel Tuesday in Asia amid investor worries that Europe's debt crisis will undermine economic growth and crude consumption.
Benchmark oil for June delivery was down eight cents to $103.03 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 77 cents to settle at $103.11 in New York on Monday.
Brent crude for June delivery was down 26 cents at $118.45 per barrel in London.
Traders are concerned fiscal austerity measures designed to lower European debt levels may trigger a recession this year. On Monday, a survey showed the eurozone's manufacturing and services sectors unexpectedly fell in April.
"Developments in the euro area continue to drive sentiment," said Gerald Lyons, chief economist at Standard Chartered. "The biggest threat facing the world economy is a collapse of one or more euro area economies."
Crude has traded between $100 and $110 for most of this year as the U.S. economy improved more than expected but crude demand remained weak.
Some analysts are optimistic that crude demand in the U.S. and China, the world's two largest oil consumers, is about to rebound. Economic sanctions by Western powers against Iran may also cut crude output from the OPEC member, tightening global supplies.
"We're looking at the bottom in U.S. gasoline demand, the bottom of the China slowdown and we are just starting to feel the pinch on Iranian sanctions," said Carl Larry at Oil Outlooks and Opinions. "Outside of another economic meltdown, there's not much that we can see that is going to bring this oil price back down."
In other energy trading, heating oil was down 0.8 cents at $3.14 per gallon and gasoline futures fell 0.7 cents at $3.14 per gallon. Natural gas rose 0.1 cent at $2.01 per 1,000 cubic feet.