Oil drops below $85 as Asian stocks slump

[April 20, 2010]  SINGAPORE (AP) -- Oil prices fell below $85 a barrel Friday as crude traders eyed a sharp drop in Asian stocks.

Benchmark crude for May delivery was down 77 cents to $84.74 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 33 cents to settle at $85.51 on Thursday.

All major Asian stock market indices fell Friday, led by Japan, China and Hong Kong. China said Thursday it will raise the minimum down payment on purchases of some residential property and free up more land for construction in a bid to cool soaring housing costs.

A Labor Department report that said initial claims for unemployment benefits rose unexpectedly for a second straight week raised doubts about the strength of the U.S. economic recovery and also weighed on stocks.

Crude traders often look to equity markets as a barometer of overall investor sentiment.

Oil prices have muddled in the mid-$80 range since jumping 25 percent in two months to above $87 last week.

"Further price consolidation within about the $84 to 87 zone appears likely into next week," Ritterbusch and Associates said in a report.

In other Nymex trading in May contracts, heating oil fell 1.23 cents to $2.240 a gallon, and gasoline dropped 1.62 cents to $2.310 a gallon. Natural gas slid 2.5 cents to $4.010 per 1,000 cubic feet.

In London, Brent crude's June contract was down 52 cents at $87.07 on the ICE futures exchange.

[Associated Press; By ALEX KENNEDY]

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