Oil hovers near $76 in Asia amid weak demand

[January 22, 2010]  KUALA LUMPUR, Malaysia (AP) -- Oil prices hovered near $76 a barrel Friday in Asia, with gains tempered by evidence of weak demand after government figures showed the United States continues to use less energy than last year.

Benchmark crude for March delivery was up 18 cents to $76.26 a barrel at late afternoon Kuala Lumpur time in electronic trading on the New York Mercantile Exchange.

On Thursday, the contract dropped to $75.66, the lowest price since Dec. 23, before settling at $76.08, down $1.66.

Oil spent most of Asian trading below $76 a barrel, partly due to a tumble in stock marets after President Barack Obama proposed tougher bank regulations, which may see less hot money flowing into commodities markets.

Goldman Sachs and other major banks have helped funnel billions of dollars of speculative money into oil and natural gas contracts during the past several years.

"Market sentiment is bearish as fundamentals remain weak but prices could bounce back if it hits $75. There will be some support at this level," said Clarence Chu, a trader with Hudson Capital Energy in Singapore.

Energy prices tumbled after the Energy Information Administration reported Thursday that demand for gasoline and jet fuel both weakened during the past few weeks.

America is consuming less petroleum than the same time last year, and refineries, which have struggled to pass higher crude costs along to consumers, are now operating at the lowest levels since September 2008. Natural gas supplies dropped more than expected to 2.6 trillion cubic feet and are now slightly lower than the five-year average.

In other Nymex trading in February contracts, heating oil rose 0.7 cent to $1.99 a gallon, while gasoline rose 1.2 cent to $1.995 a gallon. Natural gas futures gained 5 cents to $5.665 per 1,000 cubic feet.

In London, Brent crude for March delivery rose 27 cents to $74.85 a barrel on the ICE Futures exchange.

[Associated Press; By EILEEN NG]

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