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Oil hovers below $100 after US supplies soar

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[December 29, 2011]  SINGAPORE (AP) -- Oil prices hovered below $100 a barrel Thursday in Asia after a report showed U.S. crude supplies jumped last week, a sign demand could be weakening.

Benchmark crude for February delivery rose 19 cents to $99.55 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $1.98 to settle at $99.36 in New York on Wednesday.

In London, Brent crude was down 2 cents at $107.54 a barrel on the ICE Futures exchange.

The American Petroleum Institute said late Wednesday that crude inventories rose 9.6 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 2.3 barrels.

Inventories of gasoline added 1.9 barrels last week while distillates grew 600,000 barrels, the API said.

The Energy Department's Energy Information Administration reports its weekly supply data later Thursday.

Investors are also closely watching developments in the Persian Gulf. On Tuesday, Iran's vice president said his country will close the Strait of Hormuz, and cut off crude exports, if Western nations impose sanctions on Iran's oil shipments.

On Wednesday, the U.S. Navy warned that any disruption of traffic in the strait, though which about a sixth of global production passes, would not be tolerated. A Saudi oil ministry official said his country and other Gulf producers are ready to provide more oil if Iran tries to block the strait.

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"(Closing the Strait of Hormuz) would instantly draw all consuming nations into opposition with Tehran," energy consultant Cameron Hanover said in a report. "The U.S. and its Arab allies would be compelled to open it by military force."

"Under any scenario, that would be a game-changer."

In other Nymex trading, heating oil rose 0.4 cents to $2.91 per gallon and gasoline futures slid 0.1 cent at $2.64 per gallon. Natural gas futures were up 1.1 cents to $3.13 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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