Oil falls to near $97 amid weak US, Europe demand

[May 08, 2012]  SINGAPORE (AP) -- Oil fell to near $97 a barrel Tuesday in Asia, extending nearly a week of losses as signs of sluggish economic growth in the U.S. and Europe foreshadowed tepid demand for crude.

Benchmark oil for June delivery was down 90 cents to $97.04 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange.

The contract settled down 55 cents at $97.94 in New York on Monday after trading as low as $95.34 per barrel -- its cheapest level this year. Brent crude for June delivery was down 78 cents at $112.38 per barrel in London.

Crude has dropped from $106 last week as indicators from major developed economies show they continue to struggle. Last week, the U.S. said factory orders fell in March while the economy added fewer jobs than expected in April. Spain said its economy slipped into recession last quarter as the unemployment rate reached 24 percent.

"While it is easy to malign the European recovery, the latest round of U.S. macro-economic data is troubling in itself," energy trader and consultant The Schork Group said in a report.

If the fall in oil prices continues, prices for crude products such as gasoline should also drop, providing a potential boost for consumer spending.

"The U.S. economy has shown it's incapable of maintaining growth levels when energy prices surge, so we expect growth to remain weak in the midterm and the long-term, unless the current sell-off holds," Schork said.

Data on U.S. crude inventories due for release later Tuesday will provide more information about the strength of demand for oil. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., expect the American Petroleum Institute will report crude supplies rose 2.2 million barrels last week.

"Crude supplies have been generally rising, with increases from Iraq, Libya and the U.S.," said Lawrence Eagles, an oil analyst with J.P. Morgan.

In other energy trading, heating oil was steady at $2.98 per gallon and gasoline futures fell 0.2 cent to $2.97 per gallon. Natural gas added 0.6 cents at $2.34 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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