SINGAPORE — Oil prices fell to near US$77 a barrel Thursday in Asia as investor confidence wanes that a three-week rally will continue amid signs of weak U.S. crude demand.
Benchmark crude for July delivery was down 67 cents to $77.00 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 73 cents to settle at $77.67 on Wednesday.
Oil has jumped from $64 on May 25 — after dropping from $87 earlier last month — as fears eased that Europe’s debt crisis will stall global economic growth. Investors are eyeing clues about U.S. oil demand in crude inventory data, which had shown signs of improving recently but unexpectedly rose last week, the Energy Department’s Energy Information Administration said Wednesday.
Ritterbusch and Associates said in a report that the current demand picture for oil makes it hard to justify the price rising above $78.50 a barrel.
Some analysts don’t expect the massive BP oil spill in the Gulf of Mexico to squeeze supplies anytime soon.
The U.S. government began a six-month moratorium on new deepwater exploration drilling in Gulf of Mexico and Pacific regions on May 28 in response to the spill.
“While environmentally catastrophic, the amounts of oil involved are too small to materially alter global supply-demand balances in the near-term,” Bank of America Merrill Lynch said in a report.
Crude production in the Gulf of Mexico accounts for 1.9 per cent of overall global oil output of 86 million barrels per day, the bank said.
In other Nymex trading in July contracts, heating oil fell 0.4 cent to $2.1061 a gallon and gasoline dropped 0.21 cent to $2.1431 a gallon. Natural gas was up 5.1 cents at $5.029 per 1,000 cubic feet.
Brent crude was down 28 cents to $77.86 a barrel on the ICE futures exchange.