Oil near $102 a barrel in Asia on supply anxiety

[June 10, 2011]  KUALA LUMPUR, Malaysia (AP) -- Oil prices hovered near $102 a barrel Friday in Asia amid anxiety that global supply may not be able to meet growing energy demand.

Benchmark oil for July delivery was down 5 cents to $101.88 a barrel at midday Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract gained $1.19 to settle at $101.93 on Thursday.

In London, Brent crude for July delivery was up 24 cents to $119.81 a barrel on the ICE Futures exchange.

World oil demand is expected to outpace supplies later this year by the widest margin since 2007. OPEC has decided not to increase oil production but Saudi Arabia and a few other oil-producing nations are expected to boost exports anyway -- which will drain spare capacity in the cartel that controls more than a third of global output.

In addition, ongoing conflicts in the Middle East and North Africa and the U.S. hurricane season are adding to the risk of reduced supplies.

"Declining spare OPEC capacity makes the oil market fundamentally bullish even though there is no real shortage. The oil market landscape is price supportive in the near-term," said Victor Shum, an analyst with energy consultancy Purvin & Gertz in Singapore.

Shum said crude price could easily swing back to the $110-$120 per barrel level seen in early May.

Some analysts are more pessimistic about global crude demand. Slowing economic growth in the U.S., Europe, Japan and China could lead to "fairly static" crude demand for the rest of the year into early 2012, said Richard Soultanian of NUS Consulting.

In other Nymex trading in July contracts, heating oil rose 0.2 cent to $3.14 a gallon while gasoline fell 0.3 cent to $3.04 a gallon. Natural gas futures were up 1 cent at $4.68 per 1,000 cubic feet.

[Associated Press; By EILEEN NG]

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