Oil near $94 as IEA warns crude costs hurt economy

[June 21, 2011]  SINGAPORE (AP) -- Oil prices rose above $94 a barrel Tuesday in Asia as a top energy industry expert warned higher fuel costs could undermine global economic growth.

Benchmark oil for July delivery was up $1.21 to $94.47 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract gained 25 cents to settle at $93.26 on Monday.

In London, Brent crude for August delivery was up $1 to $112.69 a barrel on the ICE Futures exchange.

High crude prices could send the global economy back into recession, said Fatih Birol, chief economist at the International Energy Agency.

"My worry is that current oil prices are a major risk of the global economic recovery," Birol said in a speech Tuesday in Singapore. "I'm very worried that we could see the same movie that we saw in 2008."

Oil surged to $147 in July 2008, pinching consumer spending just as the global financial crisis undermined investor confidence. Crude traded at $33 by December of that year.

On Monday, a second day of talks in Luxembourg between Greek and eurozone officials did not produce a final agreement on the next installment of rescue loans for Greece or on a broader, second bailout expected in cooperation with the International Monetary Fund.

Some analysts downplayed the importance of Greece's debt crisis on oil.

"The oil market will only see a major impact if the crisis spreads to larger countries in Europe," J.P. Morgan said in a report. "The main path through which Greece impacts oil in the short-term is via the euro/U.S. dollar exchange rate."

Oil tends to rise when the dollar drops as a cheaper U.S. currency makes commodities such as crude cheaper for investors with other currencies. When the dollar gains, oil tends to fall.

The euro rose to $1.4356 on Tuesday from $1.4309 late Monday.

In other Nymex trading in July contracts, heating oil rose 2 cents to $2.95 a gallon while gasoline gained lost 3 cents to $2.91 a gallon. Natural gas futures added 0.6 cent at $4.32 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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