SINGAPORE – Oil prices hovered below $98 a barrel Tuesday in Asia as traders eyed signs of weak economic growth in the U.S. and Europe, which suggest crude demand will remain tepid.
Benchmark oil for June delivery was down 13 cents to $97.81 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 55 cents to settle at $97.94 in New York on Monday.
Brent crude for June delivery was up 10 cents at $113.26 per barrel in London.
Crude has dropped from $106 last week amid investor concern that struggling developed economies will undermine oil consumption. Last week, the U.S. said factory orders fell in March while the economy added fewer jobs than expected in April. Spain also said its economy slipped into recession last quarter as the unemployment rate reached 24 percent.
"While it is easy to malign the European recovery, the latest round of U.S. macro-economic data is troubling in itself," energy trader and consultant The Schork Group said in a report.
If the fall in oil prices continues, prices for crude products such as gasoline should also drop, providing a potential boost for consumer spending.
"The U.S. economy has shown it's incapable of maintaining growth levels when energy prices surge, so we expect growth to remain weak in the midterm and the long-term, unless the current sell-off holds," Schork said.
Investors will be watching closely the latest data on U.S. crude inventories scheduled to be released later Tuesday. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., expect the American Petroleum Institute will report crude supplies rose 2.2 million barrels last week.
"Crude supplies have been generally rising, with increases from Iraq, Libya and the U.S.," said Lawrence Eagles, an oil analyst with J.P. Morgan.
In other energy trading, heating oil was up 1 cent at $2.99 per gallon and gasoline futures gained 1.2 cents to $2.99 per gallon. Natural gas added 0.2 cents at $2.34 per 1,000 cubic feet.