Oil hovers near $77 on US economy, crude demand

[July 29, 2010]  SINGAPORE (AP) -- Oil prices hovered near $77 barrel Thursday in Asia amid signs of a slowing U.S. economy and weak demand for crude.

Benchmark crude for September delivery was up 16 cents at $77.15 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 51 cents to settle at $76.99 on Wednesday.

Oil has traded near $75 most of this year on mixed U.S. economic news -- corporate earnings have rebounded but the unemployment rate remains high. On Wednesday, a Federal Reserve report said the economic recovery is slowing in some parts of the country.

Oil consumption also appears to be sluggish. Crude supplies grew by 7.3 million barrels last week, according to the Energy Department's Energy Information Administration. Analysts expected a drop of 2.3 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

Supplies of gasoline and distillates, which include diesel and heating oil, also rose.

Barclays Capital said in a report that the main driver of oil prices has been skittish sentiment about the economic recovery. "It may take a while before the ghosts from the previous crisis go away entirely."

In other Nymex trading in August contracts, heating oil rose 0.43 cent to $2.0007 a gallon, gasoline was steady at $2.0638 a gallon and natural gas held at $4.724 per 1,000 cubic feet.

Brent crude was up 9 cents to $76.15 a barrel on the ICE futures exchange.

[Associated Press; By ALEX KENNEDY]

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