Oil hovers above $83 in Asia as investors eye weak US crude demand, European debt crisis

KUALA LUMPUR, Malaysia – KUALA LUMPUR, Malaysia (AP) — Oil prices hovered above $83 a barrel Thursday in Asia, weighed down by signs of weak U.S. crude demand and an escalating European debt crisis.

Benchmark crude for May delivery was down 3 cents to $83.19 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 78 cents to settle at $83.22 on Wednesday.

Crude has tumbled from above $87 a barrel earlier this month amid investor concern that a recovering U.S. economy isn't boosting oil consumption.

Crude inventories increased by nearly 2 million barrels last week, more than analysts expected, according to the Energy Department's Energy Information Administration's weekly report. Supplies of gasoline and distillates used for diesel fuel and heating oil also continue to be well above average, according to the report.

"We view the market as shifting into a new and lower trading range," Ritterbusch and Associates said in a report. "We look for this process to continue with the assistance of increasingly bearish oil supply-usage balances."

The deteriorating debt positions of some Southern European countries have also undermined investor optimism this week. Standard & Poor's lowered its credit rating for Spain on Wednesday, a day after it slashed its ratings for Greece and Portugal.

In other Nymex trading in May contracts, heating oil fell 0.65 cent to $2.223 a gallon, and gasoline dropped 0.37 cent to $2.329 a gallon. Natural gas was steady at $4.351 per 1,000 cubic feet.

In London, Brent crude was down 17 cents at $85.99 on the ICE futures exchange.