Oil higher on signs of weaker demand

2011-05-20 09:28

Singapore - Oil prices rose slightly to near $99 a barrel on Friday in Asia as traders mulled whether the global economy will weaken this summer and undermine crude demand.

Benchmark crude for June delivery was up 47 cents to $98.91 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. In London, Brent crude for July delivery was up 21c to $111.63 a barrel on the ICE Futures exchange.

Crude has bounced around in the upper-$90s most of this week as investors eye a volatile US dollar and mixed signs about the strength of the US economy and oil demand.

The International Energy Agency said on Thursday that higher fuel costs crude jumped to near $115 earlier this month from $84 in February threatening to slow the global economic recovery. Japan said its economy slipped into recession last quarter after gross domestic product fell an annualised 2.3% in the January-to-March period.

"The fundamentals for commodity prices are starting to weaken as the world economy slows and supply recovers from recent shocks," Capital Economics said in a report.

In other Nymex trading in June contracts, heating oil rose 0.3 cent to $2.90 a gallon and gasoline dropped 2.3c to $2.90 a gallon. Natural gas futures slid 0.2c to $4.09 per 1 000 cubic feet.