SINGAPORE – Oil prices fell to $93 a barrel Friday in Asia as investors waited to see if a reworked $700 billion financial industry bailout package will pass the U.S. Congress and help stabilize the economy of the world's biggest crude consumer.
Light, sweet crude for November delivery was down 52 cents to $93.45 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. Prices fell overnight $4.56 to settle at $93.97.
The House of Representatives is expected to vote later Friday on the rescue package after the Senate overwhelmingly approved it Wednesday. House lawmakers stunned investors Monday by rejecting the bailout plan, although the Senate added $100 billion in tax breaks and other sweeteners in a bid to win over enough dissenting House votes.
"Approving the bailout may create a little bounce and alleviate the negative sentiment temporarily," said John Vautrain, an energy analyst with consultancy Purvin & Gertz in Singapore. "The problem is U.S. gasoline demand has been off one heck of lot."
Statistics from the U.S. Labor Department released Thursday showed more signs of a weakening economy, adding to concerns about falling oil demand.
The Labor Department reported that initial claims for jobless benefits increased by 1,000 to a seasonally adjusted 497,000, significantly above analysts' estimate of 475,000 and a seven-year high.
Also Thursday, the Commerce Department said factory orders in August plunged by 4 percent compared to July, a much steeper decline than the 2.5 percent drop analysts expected and the biggest setback since a 4.8 percent plunge in October 2006.
"All the indicators have been very negative," Vautrain said. "There's been an economic wallop, and people don't have as much money to spend."
Significant gains over the past days by the dollar against the euro have also helped push down prices. Investors tend to buy commodities like oil to defend against dollar weakness and a hedge against inflation, but return to the U.S. currency as it strengthens.
The 15-nation euro was steady at $1.38 in trading Friday while the dollar was little changed at 105.06 yen.
In other Nymex trading, heating oil futures fell 0.2 cents to $2.71 a gallon, while gasoline prices dropped 1.5 cents to $2.24 a gallon. Natural gas for November delivery fell 6.1 cents to $7.42 per 1,000 cubic feet.
In London, November Brent crude fell 43 cents to $90.13 a barrel on the ICE Futures exchange.