SINGAPORE – Oil prices hovered near $85 a barrel Monday in Asia, consolidating after a big fall as investors mull what steps China may take to ease inflation pressures.
Benchmark oil for December delivery was up 15 cents at $85.04 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange.
The contract fell $2.93, or 3.3 percent, to settle at $84.88 on Friday after China said inflation quickened to 4.4 percent in October. Traders are concerned policymakers may take additional measures to slow Chinese economic growth, which would undermine demand for crude.
"Investors were forced to face a potential increase in Chinese interest rates or other steps designed to cool the overheating engine of Chinese growth," Cameron Hanover said in a report. "Of course, that's the only engine that is firing on all cylinders right now."
A rally to above $88, fueled by U.S. Federal Reserve bond purchases and a weakening dollar, stalled last week as the U.S. currency rebounded and investor feared that global economic growth could disappoint.
In other Nymex trading in December contracts, heating oil rose 0.71 cent to $2.370 a gallon and gasoline was steady at $2.21 a gallon. Natural gas held at $3.803 per 1,000 cubic feet.
In London, Brent crude added 2 cents to $86.55 a barrel on the ICE Futures exchange.