Oil hovers above $75 amid tepid US economy

[August 19, 2010]  SINGAPORE (AP) -- Oil prices hovered above $75 a barrel Thursday in Asia amid investor concerns U.S. economic growth will slow in the second half and stymie demand for crude.

Benchmark crude for September delivery rose 10 cents to $75.54 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract lost 35 cents to settle at $75.42 on Wednesday.

Oil has traded around $75 a barrel for most of the last year. Price jumps above $80, such as the one last week, have so far been dragged down by worries global economic growth isn't strong enough to justify a sustained rally.

"While mounting economic worries have kept a lid on prices, they have nonetheless found a floor around $75," Barclays Capital said in a report.

The Energy Department's Energy Information Administration said Wednesday that crude supplies fell less than expected last week as demand remained sluggish.

Analysts are closely watching how a reduction of U.S. stimulus spending in the second half and next year could undermine economic growth. China, which has seen energy demand soar this year, may move to tighten monetary policy to avoid inflation and asset price bubbles.

"U.S. fiscal policy looks set to shift from a boost to a drag on economic growth," Goldman Sachs said in a report. "The anticipated tightening of Chinese economic policy is having an impact on Chinese oil demand."

"The path of future economic growth is becoming more dependent on economic policy in both China and the United States," Goldman said.

In other Nymex trading in September contracts, heating oil rose 0.17 cent to $2.027 a gallon, gasoline fell 0.76 cent to $1.954 a gallon and natural gas held at $4.236 per 1,000 cubic feet.

In London, Brent crude rose 33 cents to $76.80 a barrel on the ICE Futures exchange.

[Associated Press; By ALEX KENNEDY]

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