Oil under $99 in Asia on fears of weak fuel demand

[May 25, 2011]  KUALA LUMPUR, Malaysia (AP) -- Oil prices fell to below $99 a barrel Wednesday in Asia amid indications of weakening fuel demand in the U.S.

Benchmark oil for July delivery fell 73 cents to $98.86 a barrel at midday Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract rose $1.89 to settle at $99.59 on Tuesday.

In London, Brent crude for July delivery was down 74 cents at $111.79 a barrel on the ICE Futures exchange.

Victor Shum, an analyst with energy consultancy Purvin & Gertz in Singapore, said traders took profits after data released late Tuesday by the American Petroleum Institute showed a large gain in gasoline supply.

This underscored concerns that higher pump prices are forcing Americans to drive less, he said.

"We are heading into summer which is peak demand season for gasoline, so the report showing gasoline stocks increasing substantially signals that fuel demand may be weakening in the U.S.," Shum said.

The Energy Information Administration will release its weekly inventory data later Wednesday.

Oil has dropped from a 30-month high near $115 a barrel on May 2 but received a boost Tuesday after Goldman Sachs, J.P. Morgan and Morgan Stanley said prices will rise later this year as the Libya conflict hit global supply.

Goldman Sachs expects WTI to hit $135 per barrel by the end of 2012. Morgan Stanley predicts Brent will average $120 per barrel in 2011 while J.P. Morgan said Brent should hit $130 per barrel in the third quarter.

In other Nymex trading in June contracts, heating oil fell 1.1 cents to $2.91 a gallon and gasoline dropped 3 cents to $2.96 a gallon. Natural gas futures shed 2 cents to $4.37 per 1,000 cubic feet.

[Associated Press; By EILEEN NG]

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