Oil below $81 amid growing global economy fears
SINGAPORE — Oil prices hovered below $81 a barrel Friday in Asia, gaining back a little of the previous day's big loss amid the prospect of weaker demand for crude as the global economy slows.
Benchmark oil for November delivery was up 16 cents to $80.67 at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude plunged $5.41, or 6.3 percent, to settle at $80.51 on Thursday.
In London, Brent crude for November delivery was up 19 cents at $105.68 on the ICE Futures exchange.
Crude has dropped 10 percent from above $90 last week as investors fret Europe's debt crisis and a weak U.S. economy will stymie oil demand.
"Time is running out for Europe, and as a result, it is perhaps running out for the whole world," said James Swanson, chief strategist at MFS Investment Management.
The worsening global outlook has pounded stock markets, which oil traders look to as a gauge of overall investor sentiment. The Dow Jones industrial average sank 3.5 percent Thursday and most Asian stock markets fell Friday.
A stronger U.S. dollar, which makes crude more expensive for investors with other currencies, has also boosted oil prices.
Signs of weakening industrial production in China this week have analysts predicting that Asian demand for commodities could be slowing.
"The main risk for the region remains the highly uncertain outlook for the global economy," Capital Economics said in a report. "Another global downturn on the scale of that seen in 2008-2009 would see the region's exports plunge."
Some analysts still expect crude demand to outstrip supply and send prices higher. Goldman Sachs reiterated its forecast Brent crude will average $130 next year.
"Global crude oil markets continue to be torn between heightened concerns over the global economic outlook and the continued resilience of crude oil fundamentals," Goldman said in a report. "It is only a matter of time before inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices to restrain demand."
In other Nymex trading for November contracts, heating oil was steady at $2.85 per gallon and gasoline futures rose 1.7 cents to $2.56 per gallon. Natural gas for October delivery added 2.0 cents to $3.72 per 1,000 cubic feet.