Oil below $92 amid grim US, Europe economy outlook

[August 04, 2011]  SINGAPORE (AP) -- Oil prices hovered below $92 a barrel Thursday in Asia amid investor concern economic growth in developed countries may be grounding to a halt.

Benchmark oil for September delivery was down 7 cents to $91.86 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude dropped $1.86 to settle at $91.93 on Wednesday.

In London, Brent crude was up 22 cents at $113.45 a barrel on the ICE Futures exchange.

Crude has dropped from near $100 a barrel two weeks ago amid a slew of disappointing U.S. economic news. On Wednesday, the Institute of Supply Management said its index measuring the service sector of the U.S. economy grew in July at the weakest pace in 17 months.

Investors will be closely watching Friday's jobs report for July. Economists expect that 90,000 jobs were created in the U.S. last month, and that the unemployment rate was unchanged at 9.2 percent.

Traders are also concerned about Europe's sovereign debt crisis and its possible negative impact on economic growth and crude demand. On Wednesday, Italian and Spanish bond yields surge to 14-year highs, a sign investors consider a default increasingly likely.

"The main impetus behind further expected weakening in oil is an evolving deterioration in both the European and U.S. economies," energy consultant Ritterbusch and Associates said in a report. "A bad employment number is capable of carrying oil toward the $90 area."

In other Nymex trading in September contracts, heating oil rose 0.4 cent to $3.02 a gallon while gasoline dropped 0.9 cent to $2.92 a gallon. Natural gas futures was steady at $4.09 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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