Oil prices drop to $106 in Asia
US crude supply jump suggests demand remains weak.
SINGAPORE— Oil prices fell to near US$106 a barrel Wednesday in Asia after a report showed a jump in U.S. crude supplies, a sign demand remains sluggish.
Benchmark oil for April delivery was down 35 cents to $106.36 at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 37 cents to settle at $106.71 per barrel in New York on Tuesday.
Brent crude was down 23 cents at $125.99 per barrel in London.
The American Petroleum Institute said late Tuesday that crude inventories rose 2.8 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted an increase of 2.1 million barrels.
Inventories of gasoline fell 2.1 million barrels last week while distillates tumbled 3.5 million barrels, the API said.
The Energy Department’s Energy Information Administration reports its weekly supply data later Wednesday.
Crude has surged from $75 in October as evidence of a strengthening U.S. economy during recent months has eased fears of a recession. The government said Tuesday that retail sales rose 1.1 per cent, the biggest jump since September.
“The worst fears of the last three months of 2011 have not materialized,” Singapore central bank managing director Ravi Menon said in a speech Wednesday. “The last six weeks in particular have shown signs that the global economy has avoided imminent disaster.”
However, “a sharp spike in oil prices could potentially derail global economic growth,” he said.
Policymakers and analysts are worried higher fuel costs will undermine consumer spending and quicken inflation.
In other energy trading, heating oil was down 0.9 cent at $3.26 per gallon and gasoline futures fell 0.1 cent at $3.35 per gallon. Natural gas slid 2.2 cents at $2.28 per 1,000 cubic feet.