Oil hovers below $74 amid growth uncertainty

[August 23, 2010]  KUALA LUMPUR, Malaysia (AP) -- Oil prices hovered below $74 a barrel Monday in Asia as uncertainty about the global economy's prospects outweighed possible production disruptions in the Gulf of Mexico due to hurricane season.

Benchmark crude for October delivery was down 7 cents to $73.75 a barrel at late afternoon Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract lost 97 cents to settle at $73.82 on Friday.

Crude prices initially rose Monday amid concerns that Tropical Storm Danielle is strengthening in the Atlantic and could become a hurricane by late Tuesday. But forecasters have said it appears to be heading toward Bermuda and will not threaten any major land area.

"The Tropical Storm Danielle should pose no threat to production facilities in the Gulf of Mexico but it is providing enough support for oil to allow prices to hold on to $74 a barrel," said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore.

Shum said market sentiment remained pessimistic amid uncertainties over the global economic recovery.

He pegged crude prices at around $75 a barrel in the near term, with a floor provided by production concerns amid the hurricane season.

In other Nymex trading in September contracts, natural gas for September delivery fell 4.8 cents to $4.069 per 1,000 cubic feet. Heating oil dropped 0.26 cent to $1.968 a gallon and gasoline slipped 0.6 cent to $1.919 a gallon.

Brent crude was down 21 cents at $74.05 a barrel on the ICE futures exchange.

[Associated Press; By EILEEN NG]

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.