SINGAPORE – Oil hovered above $80 a barrel Thursday in Asia amid signs the U.S. economy, the world's largest crude consumer, may be improving.
Benchmark oil for August delivery was up 10 cents at $80.31 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 85 cents to settle at $80.21 in New York on Wednesday.
In London, Brent crude for August delivery was down 40 cents at $93.10 per barrel on the ICE Futures exchange.
On Wednesday, the U.S. said durable goods orders rose by 1.1 percent in May, reversing a two-month drop. Pending home sales also jumped in May.
Crude has plummeted from $106 early last month on expectations weak global economic growth will drag down oil demand. Some analysts expect crude to hover near $80 until U.S. demand picks up.
"This is the longest and slowest recovery from double digit unemployment ever" for the U.S., said Carl Larry of Oil Outlooks and Opinions. "Prices are going to be a fair value for producers and consumers around $80."
Investors will be eyeing a two-day European Union summit scheduled to start later Thursday. While most analysts don't expect E.U. leaders to announce a major policy initiative, traders will be closely watching for signs of progress toward a solution to the region's debt and economic woes.
Signs of a weakening Chinese economy have also dragged oil prices lower. Citigroup estimates China will account for about half of global oil consumption growth this year.
"While Europe concerns impact all asset markets, the slowdown in China is particularly daunting for commodities," Citigroup said in a report.
However, the recent drop in fuel costs should help Asian economies by easing inflation pressures and giving policymakers more room for fiscal and monetary stimulus measures.
"In general, cheaper oil is in itself a good thing for Asia," Capital Economics said in a report. "The trouble is that oil prices are falling because the global economy is getting weaker. This means that instead of pushing up Asian growth, lower oil prices will only cushion the downside."
In other energy trading, heating oil was down 1 cent at $2.58 per gallon while gasoline futures slid 0.6 cent at $2.49 per gallon. Natural gas added 2.9 cents at $2.83 per 1,000 cubic feet.