Oil hovers below $85 amid Asian, US demand growth

[April 20, 2010]  SINGAPORE (AP) -- Oil prices hovered below $85 a barrel Thursday in Asia amid signs global crude demand is growing.

Benchmark crude for May delivery was down 2 cents to $85.82 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract added $1.79 to settle at $85.84 on Wednesday.

Crude investors were encouraged by signs of strong economic growth in Asia. China said Thursday its gross domestic product grew 11.9 percent in the first quarter from a year earlier while Singapore's economy expanded 13 percent from a year ago.

"Non-OECD oil demand continues to increase at a phenomenal pace," said Barclays Capital in a report, referring to economies outside the major developed countries of the Organization for Economic Cooperation and Development. "Prices are getting comfortable with the newfound trading range of $80 to $90."

Crude leaped to above $87 last week after trading between $69 and $84 for the previous nine months.

Oil traders were also cheered by news U.S. weekly crude inventories had their first declined since January, suggesting demand is recovering.

The Energy Information Administration said crude supplies dropped by 2.2 million barrels for the week ended April 9. Analysts expected them to increase by 1.6 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

In other Nymex trading in May contracts, heating oil was steady at $2.241 a gallon, and gasoline fell 0.37 cent to $2.329 a gallon. Natural gas dropped 2 cents to $4.179 per 1,000 cubic feet.

In London, Brent crude was up 23 cents at $86.38 on the ICE futures exchange.

[Associated Press; By ALEX KENNEDY]

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