Oil above $95 after Bernanke stimulus comments

LONDON — Oil prices hovered above $95 a barrel on Friday after Federal Reserve Chairman Ben Bernanke said another round of monetary stimulus was not imminent and Standard & Poor's warned it may cut the U.S. debt rating.

Benchmark oil for August delivery was down 3 cents to $95.66 a barrel early afternoon European time in electronic trading on the New York Mercantile Exchange. Crude fell $2.36 to settle at $95.69 on Thursday.

In London, Brent crude fell 28 cents to $115.98 per barrel on the ICE Futures exchange.

Bernanke said Thursday that there would have to be signs of deflation before the Fed would consider a third round of Treasury bond purchases, known as quantitative easing, or other stimulus measures.

Quantitative easing weakens the U.S. dollar and boosts demand for oil, which is traded in dollars. On Wednesday, Bernanke's comments that the Fed would consider more stimulus if the economy worsens had sent oil prices higher.

Meanwhile, credit rating agency Standard & Poor's said there is a 50 percent chance it will downgrade the U.S. government's credit rating within three months because of the congressional impasse over approving an increase in the debt ceiling.

The warning followed a similar move by Moody's and weighed on market sentiment, both in commodities and equities.

Crude has traded in the $90s for most of the last two months. It surged from $84 in February to near $115 in May as a civil war in Libya shut down almost all of the OPEC country's 1.6 million barrels a day of oil output.

Some analysts worry that Libya's oil industry will be disrupted for longer than expected because the conflict has hardened into a stalemate and a departure of leader Moammar Gadhafi could create chaos.

"To expect a return to the prior status quo in Libya, either politically or in the context of the oil market both in the short and the long term, would be incorrect," Barclays Capital said in a report. "There is likely to be a tremendous political vacuum in the absence of Gadhafi."

Libya on Thursday barred Italy from future participation in its oil sector because of Rome's role in NATO airstrikes on the country.

In other Nymex trading in August contracts, heating oil fell 1 cent to $3.08 a gallon while gasoline dropped 1 cent to $3.11 a gallon. Natural gas futures gained 2 cents at $4.38 per 1,000 cubic feet.