Oil hovers above $80 after 3-week rally

SINGAPORE -- Oil prices hovered above $80 a barrel Tuesday in Asia as investors mulled whether sluggish U.S. crude demand justified a 15 percent rally over the last three weeks.

Benchmark crude for April delivery was down 15 cents at $80.15 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract added 25 cents to settle at $80.31 on Monday.

Oil has jumped from $69.59 a barrel on Feb. 5 on investor optimism that the global economy will rebound strongly from recession last year. Yet growing inventories of crude, gasoline and diesel fuel suggest demand in the U.S. remains weak.

Some analysts expect crude demand in the U.S. and Japan will gradually follow overall economic growth and lift prices. Goldman Sachs expects crude to trade between $85 and $95 for most of this year.

"Continuing growth in the two largest developed market economies suggests that the economic recovery is still on track." Goldman Sachs said in a report. "We expect that Japanese oil demand will break the trend of the past decade and grow in 2010."

In other Nymex trading in March contracts, heating oil was steady at $2.0785 a gallon while gasoline rose 0.3 cent to $2.1185 a gallon. Natural gas fell 2.1 cents to $4.874 per 1,000 cubic feet.

In London, Brent crude was down 22 cents at $78.40 on the ICE futures exchange.