Oil drops to near $80, extending Friday's losses
SINGAPORE: Oil prices dropped to near $80 a barrel Monday in Asia, extending losses from Friday as a monthlong rally fizzled out.
Benchmark crude for April delivery was down 59 cents to $80.09 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract dropped $1.52 to settle at $80.68 a barrel on Friday.
Oil has bounced between $70 and $85 for most of the last nine months as the global economy recovers from last year's recession. Crude jumped to $83 a barrel last week from $69 early last month on expectations consumer demand will begin to pickup, but U.S. oil inventories have continued to grow in recent weeks.
"The supply overhang continues and that makes it difficult to sustain oil above $80," said Victor Shum, an energy analyst with consultancy Purvin & Gertz. "Global demand is slowly recovering but remains fragile."
Crude demand from China, the world's second-largest oil consumer, soared 17 percent in February from a year earlier, according to analysis by Platts, the energy information arm of McGraw-Hill Cos.
Prices this year have also been supported by low interest rates and investors using commodities such as oil as an asset class.
"We have a lot of cheap money chasing returns," Shum said.
In other Nymex trading in April contracts, heating oil fell 1.25 cents to $2.064 a gallon, and gasoline dropped 1.08 cents to $2.245 a gallon. Natural gas slid 4.6 cents to $4.123 per 1,000 cubic feet.
In London, Brent crude was down 51 cents at $79.37 on the ICE futures exchange.