Oil hovers below $88 as Suez Canal concerns wane

[February 08, 2011]  SINGAPORE (AP) -- Oil prices hovered below $88 a barrel Tuesday in Asia as fears ease that protests in Egypt could disrupt Middle East crude supplies.

Benchmark crude for March delivery was up 11 cents at $87.59 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $1.55 to settle at $87.48 on Monday.

In London, Brent crude rose 40 cents to 99.65 per barrel on the ICE Futures exchange.

Oil jumped above $92 to a 26-month high last week as violent clashes between supporters and opponents of Egyptian President Hosni Mubarak raised concern shipping through the Suez Canal -- a major transit point for crude oil and cargo -- could be affected. However, so far the political crisis has not affected crude supplies, and as the violence has waned this week, crude prices have slid back below $90.

Traders will also be watching closely the latest U.S. crude inventory figures this week for insight into the strength of demand for oil. The American Petroleum Institute is scheduled to announce its supply data later Tuesday while the Energy Department's Energy Information Administration reports Wednesday.

"Improvement on virtually every economic front except the housing market has generally been surprising on the bullish side during recent months," Ritterbusch and Associates said in a report. "Most oil demand forecasts across this year may require some upward revisions especially if the employment picture improves enough to begin forcing some meaningful improvement in gasoline consumption."

In other Nymex trading in February contracts, heating oil rose 0.8 cent to $2.71 a gallon and gasoline gained 1.4 cent to $2.64 a gallon. Natural gas futures for March delivery were up 1.1 cents at $4.12 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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