Oil prices hovered below $79 a barrel Tuesday in Asia as investors look to crude demand growth in Asia next year to offset a sluggish U.S. economy.
Benchmark crude for December delivery was down 26 cents to $78.64 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $2.55 to settle at $78.90 on Monday.
Traders are trying to anticipate the strength of the global economic recovery and how much crude demand may grow during the next 12 months. Some analysts expect demand in Asia, especially China, will help push prices higher amid a moderate U.S. recovery.
“Demand out of the U.S. will be pretty stagnant, but we’re looking at very healthy demand growth out of Asia,” said Alan Plaugmann, a commodities analyst with Saxo Capital Markets in Singapore. “I think oil fundamentals will tighten and we’ll retain the bull market.
Plaugmann said he expects crude to reach $100 a barrel during the second or third quarter next year.
In other Nymex trading, heating oil fell 0.75 cent to $2.02 a gallon. Gasoline for December delivery dropped 1.37 cents to $1.97 a gallon. Natural gas for December delivery rose 1.8 cents to $4.63 per 1,000 cubic feet.
In London, Brent crude for December delivery fell 27 cents to $78.49 on the ICE Futures exchange.
