Oil above $87 amid improving US consumer demand

[August 30, 2011]  SINGAPORE (AP) -- Oil prices hovered above $87 a barrel Tuesday in Asia amid signs of improving consumer demand in the U.S.

Benchmark oil for October delivery was down 19 cents to $87.08 at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude rose $1.90 to settle at $87.27 on Monday.

In London, Brent crude for October delivery was down 35 cents at $111.53 on the ICE Futures exchange.

Crude has jumped 16 percent from near $76 three weeks ago amid growing investor optimism the U.S. economy may not slip into recession in the second half.

On Monday, the Commerce Department said consumer spending, which accounts for 70 percent of the nation's economic activity, increased in July by the biggest amount in five months.

A rally in global stock markets also helped boost crude prices. The Dow Jones industrial average rose 2.3 percent Monday and most Asia stock markets gained Tuesday.

Some analysts expect crude to head lower as slowing global economic growth pinches oil demand.

"We still look for weak global demand to win out over the longer term eventually forcing the oil market into fresh low territory," energy consultant Ritterbusch and Associates said in a report.

In other Nymex trading for October contracts, heating oil rose 0.4 cent to $3.02 per gallon and gasoline futures gained 0.4 cent to $2.77 per gallon. Natural gas slid 1.9 cents to $3.81 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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