Oil falls near $98 as traders eye US crude demand

Oil prices fell to near $98 a barrel Monday in Asia amid investor concern soaring U.S. fuel costs are undermining crude consumption.

Benchmark crude for June delivery was down $1.45 to $98.20 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract settled at $99.65 per barrel Friday, up 68 cents.

In London, Brent crude for June delivery was down $1.06 to $112.77 a barrel on the ICE Futures exchange.

With gasoline topping $4 a gallon in some parts of the U.S., some traders are worried oil demand growth will eventually suffer in the world's largest crude market.

President Barack Obama said Saturday the U.S. would ramp up oil production by extending existing leases in the Gulf of Mexico and off Alaska's coast and holding more frequent lease sales in a federal petroleum reserve in Alaska. However, Obama said the measures wouldn't immediately bring down gasoline prices.

"Positive news on the demand side are currently the exception to the rule," consultancy JBC Energy said in a report.

Oil has retreated from a 30-month high near $115 at the beginning of the month amid a rally of the dollar, which has made crude more expensive for investors with other currencies.

"Crude oil continues to shadow the dollar to a large degree," Ritterbusch and Associates said in a report. "We still look for high negative correlation between the dollar and oil."

On Monday, the euro was little changed at $1.4131 from $1.4110 late Friday. The euro reached $1.49 earlier this month.

In other Nymex trading in June contracts, heating oil fell 2.6 cents to $2.92 a gallon and gasoline dropped 3.6 cents to $3.04 a gallon. Natural gas futures slid 3.4 cents at $4.21 per 1,000 cubic feet.