Oil slips below $88 on US crude supplies, dollar

[December 15, 2010]  SINGAPORE (AP) -- Oil prices fell below $88 a barrel Wednesday in Asia after U.S. crude supplies fell less than expected and gasoline inventories jumped, suggesting demand remains sluggish.

Benchmark oil for January delivery was down 77 cents to $87.51 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract lost 33 cents to settle at $88.28 on Tuesday.

The American Petroleum Institute said late Tuesday that crude inventories fell 1.4 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had forecast a drop of 3 million barrels. Inventories of gasoline soared 2.4 million barrels and distillates added 2 million barrels, the API said.

The Energy Department's Energy Information Administration reports its weekly supply data later Wednesday.

"If you're thinking that the API report seems bearish, we would not disagree," energy consultant The Schork Group said in a report.

A stronger U.S. dollar, which makes oil more expensive for investors with other currencies, also weighed on crude prices.

In other Nymex trading in January contracts, heating oil fell 0.9 cent to $2.46 a gallon, gasoline futures dropped 0.8 cent to $2.29 a gallon and natural gas slid 1 cent to $4.25 per 1,000 cubic feet.

In London, Brent crude fell 56 cents to $90.65 a barrel on the ICE Futures exchange.

[Associated Press; By ALEX KENNEDY]

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