Oil down near $86 after Europe, China rate cuts

[July 06, 2012]  SINGAPORE (AP) -- Oil fell to near $86 a barrel Friday in Asia amid doubts that Europe and China's interest rate cuts will be enough to halt an economic slowdown.

Benchmark oil for August delivery was down $1.17 at $86.05 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude fell 44 cents to settle at $87.22 on Thursday in New York.

In London, Brent crude for August delivery was down $1.24 at $99.46 per barrel on the ICE Futures exchange.

Central bankers in Europe and China cut lending rates Thursday while the Bank of England pledged to boost money in circulation in a bid to spur weakening economic growth. Some analysts said the moves weren't sufficiently drastic to spark growth while others expect more stimulus measures soon as the global economy deteriorates.

Crude has plummeted from $106 two months ago as Europe's economic and political turmoil dampens global growth expectations.

"We still believe that disappointing economic data going forward, while suggesting curtailed oil demand, will also increase the likelihood of some form of stimulus capable of reviving oil's appeal," energy trader and consultant Ritterbusch and Associates said in a report.

Investors also brushed off a larger than expected drop in U.S. crude supplies, which suggested demand may be improving. The Energy Department's Energy Information Administration said Thursday that crude inventories fell 4.3 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a decrease of 2 million barrels.

The U.S. June employment report due later Friday is likely to provide another cue for the oil market. Analysts are forecasting the economy added about 90,000 jobs last month and the unemployment rate was steady at 8.2 percent.

Heating oil was down 2.2 cents at $2.75 per gallon and gasoline futures slid 1.8 cents to $2.75 per gallon. Natural gas gained 3 cents to $2.98 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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