Oil hovers below $81 after US crude stocks rise

[March 25, 2010]  SINGAPORE (AP) -- Oil prices hovered below $81 a barrel Thursday in Asia after an increase in U.S. crude inventories suggested consumer demand remains weak.

Benchmark crude for May delivery was down 8 cents to $80.53 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract lost $1.30 to settle at $80.61 a barrel on Wednesday.

The Energy Department reported on Wednesday that crude inventories rose by 7.3 million barrels to 351.3 million barrels last week. Analysts had expected an increase of 1.67 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

Oil demand in Europe is worse off than the U.S., with France, Italy, Spain and the U.K. all seeing drops of more than 10 percent in January from a year earlier.

Some analysts are worried high jobless rates in the U.S. and Europe will continue to drag on consumer demand.

"It's reasonable to assume the unemployment rate in the U.S. will remain stubbornly high for at least the next two years," energy analyst Stephen Schork said in a report. "The table appears set for further demand destruction for gasoline, not just in the U.S., but in Europe as well."

In other Nymex trading in April contracts, heating oil fell 0.16 cent to $2.069 a gallon, and gasoline was steady at $2.22 a gallon. Natural gas dropped 1.3 cents to $4.092 per 1,000 cubic feet.

In London, Brent crude was down 12 cents at $79.50 on the ICE futures exchange.

[Associated Press; By ALEX KENNEDY]

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