Oil steady after plunging more than US$6

SINGAPORE – Oil prices were steady in Asia yesterday after plummeting more than US$6 a barrel in the previous session on expectations a weakening US economy will undermine crude demand.

Concern that quickening inflation and slowing economic growth will cut consumer demand in the US for fuel and other oil products may slow a bullish trend that’s seen crude prices roughly double in the past year, said Tetsu Emori, a commodity markets fund manager at ASTMAX Futures Co. in Tokyo.”The market is eyeing the weaker economy and the weaker demand out of the US,” Emori said.”The price uptrend is still ongoing, but without a news catalyst, there isn’t as much confidence that we’ll break US$150 in the short-term.”Federal Reserve Chairman Ben Bernanke told Congress on Tuesday that “numerous difficulties” are racking the US economy, and warned that rising prices for energy and food are elevating the risks of inflation.At the same time, the Labour Department reported that wholesale inflation jumped by 1,8 per cent last month, a larger-than-expected gain.Over the past year, wholesale prices have risen 9,2 per cent, the most since 1981.In late afternoon trading in Singapore yesterday, light, sweet crude for August delivery was up 11 cents at US$138.85 a barrel in electronic trading on the New York Mercantile Exchange.Crude plunged US$6.44, or 4,4 percent, Tuesday in New York to settle at US$138.74 a barrel in an extremely volatile session.Over the course of the session, the contract rose as high as US$146.73 and fell as low as US$135.92.Prices hit a trading record of US$147.27 on Friday.The latest monthly market report from the Organisation of Petroleum Exporting Countries gave traders further reason to unload oil this week.The cartel predicted world oil demand will rise by 900 000 barrels a day in 2009, or 100 000 barrels per day less than this year.Opec blamed the slowdown in growth on slumping economies and high pump prices in rich, industrialised countries.Amid the signs of demand destruction, though, potential supply threats and a weak US dollar continue to put a floor to prices.Nampa-APin Tokyo.”The market is eyeing the weaker economy and the weaker demand out of the US,” Emori said.”The price uptrend is still ongoing, but without a news catalyst, there isn’t as much confidence that we’ll break US$150 in the short-term.”Federal Reserve Chairman Ben Bernanke told Congress on Tuesday that “numerous difficulties” are racking the US economy, and warned that rising prices for energy and food are elevating the risks of inflation.At the same time, the Labour Department reported that wholesale inflation jumped by 1,8 per cent last month, a larger-than-expected gain.Over the past year, wholesale prices have risen 9,2 per cent, the most since 1981.In late afternoon trading in Singapore yesterday, light, sweet crude for August delivery was up 11 cents at US$138.85 a barrel in electronic trading on the New York Mercantile Exchange.Crude plunged US$6.44, or 4,4 percent, Tuesday in New York to settle at US$138.74 a barrel in an extremely volatile session.Over the course of the session, the contract rose as high as US$146.73 and fell as low as US$135.92.Prices hit a trading record of US$147.27 on Friday.The latest monthly market report from the Organisation of Petroleum Exporting Countries gave traders further reason to unload oil this week.The cartel predicted world oil demand will rise by 900 000 barrels a day in 2009, or 100 000 barrels per day less than this year.Opec blamed the slowdown in growth on slumping economies and high pump prices in rich, industrialised countries.Amid the signs of demand destruction, though, potential supply threats and a weak US dollar continue to put a floor to prices.Nampa-AP