Oil falls to near $84 before crude supply reports

[November 16, 2010]  SINGAPORE (AP) -- Oil prices fell to near $84 a barrel Tuesday in Asia as traders looked to the latest U.S. crude supply reports for clues about the strength of consumer demand for fuel.

Benchmark oil for December delivery was down 60 cents to $84.26 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 2 cents to settle at $84.86 on Monday.

Crude inventories likely rose 1.2 million barrels last week, according to analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos. The American Petroleum Institute plans to announce its inventory numbers later Tuesday while the Energy Department's Energy Information Administration reports its weekly supply data Wednesday.

A plunge in Asian stock markets Tuesday hurt crude trader optimism. China's benchmark index in Shanghai fell 4.0 percent and Hong Kong's Hang Seng index was down 1.4 percent.

Some analysts warn that if oil prices jump above $100 -- crude rose to $147 in July 2008 -- inflation in Asia would quicken, undermining economic expansion in the world's fastest growing region.

"Asia's economic engine is now so tightly wound that a spike in energy prices may well send inflation rocketing," HSBC said in a report. "All of Asia is vulnerable to a rise of crude prices."

In other Nymex trading in December contracts, heating oil fell 1.5 cents to $2.36 a gallon and gasoline slipped 0.4 cent to $2.19 a gallon. Natural gas held at $3.855 per 1,000 cubic feet.

In London, Brent crude lost 42 cents to $86.34 a barrel on the ICE Futures exchange.

[Associated Press; By ALEX KENNEDY]

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