Oil falls below $85 as Bernanke speech awaited

[August 26, 2011]  SINGAPORE (AP) -- Oil prices fell slightly to below $85 a barrel Friday in Asia as investors awaited a key policy speech later in the day from U.S. Federal Reserve Chairman Ben Bernanke.

Benchmark oil for October delivery was down 39 cents to $84.91 at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude rose 14 cents to finish at $85.30 on Thursday.

In London, Brent crude for October delivery was up 8 cents to $110.70 on the ICE Futures exchange.

Oil has traded near $85 most of this week as investors speculated whether Bernanke will announce any monetary stimulus measures to help boost lending and economic growth in a speech from Jackson Hole, Wyoming. Analysts expect oil would jump if Bernanke signals the Fed plans another round of Treasury bond purchases, known as quantitative easing.

"A lack of indications of revived monetary easing could prompt a significant sell-off across a broad swatch of the financial and commodity arenas," energy consultant Ritterbusch and Associates said in a report.

Traders will also be eyeing possible revisions to second quarter U.S. gross domestic product and the latest consumer sentiment data.

Hurricane Irene could push crude prices higher if it disrupts refineries in Delaware, New Jersey, Pennsylvania and Virginia, which produce nearly 8 percent of U.S. gasoline and diesel fuel.

Irene is forecast to affect a broad area, from North Carolina to Canada, with flooding and winds as high as 120 miles (190 kilometers) an hour. The storm destroyed hundreds of homes on small Bahamian islands Thursday, and some forecasters think Irene could be the worst hurricane to hit the U.S. Northeast in 50 years.

In other Nymex trading for October contracts, heating oil fell 0.4 cent to $2.99 per gallon and gasoline futures dropped 0.6 cent to $2.80 per gallon. Natural gas for September delivery added 0.3 cent to $3.93 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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