Oil hovers below $89 ahead of US supply figures

[December 14, 2010]  SINGAPORE (AP) -- Oil prices hovered below $89 a barrel Tuesday in Asia as traders look to weekly U.S. crude inventory figures for signs demand could be improving.

Benchmark oil for January delivery was up 20 cents to $88.81 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 82 cents to settle at $88.61 on Monday.

Crude inventories likely fell 3 million barrels last week, according to analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos. The American Petroleum Institute is scheduled to announce its inventory numbers later Tuesday while the Energy Department's Energy Information Administration reports its weekly supply data Wednesday.

Goldman Sachs said investors were overly pessimistic this year about global crude demand because most of the consumption growth happened in developing economies.

"This misperception has largely been driven by the fact that the recovery has been led by emerging market countries, with the U.S. oil market lagging," Goldman said in a report. "Inventories outside the U.S. have largely returned to more normal levels while U.S. oil inventories have only recently begun to draw."

Goldman expects crude to average $100 next year and $110 in 2012.

"World oil demand came roaring back in 2010," Goldman said. "The world oil market recovery will be increasingly evident in the United States in 2011, giving the market a recovery it can see and believe in."

In other Nymex trading in January contracts, heating oil rose 0.6 cent to $2.47 a gallon, gasoline futures dropped 0.2 cent to $2.32 a gallon and natural gas fell 0.8 cent to $4.41 per 1,000 cubic feet.

In London, Brent crude rose 25 cents to $91.64 a barrel on the ICE Futures exchange.

[Associated Press; By ALEX KENNEDY]

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