Oil hovers above $69 amid weak crude demand

SINGAPORE: Oil prices hovered above $69 a barrel Wednesday in Asia after the U.S. and OPEC said global crude consumption will slump this year as economies struggle to emerge from recession.

Benchmark crude for September delivery was unchanged at $69.45 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange. On Tuesday, the contract fell $1.15 to settle at $69.45.

The Energy Department's Energy Information Administration on Tuesday said global crude demand will likely fall by 1.71 million barrels this year, more than its previous forecast of a drop of 1.56 million barrels.

The Organization of Petroleum Exporting Countries said it expects consumption to slide by 1.65 million barrels a day this year, before rising next year.

Investors have mostly shrugged off dismal demand numbers in recent months, focusing instead on signs the global economy may recover by the end of the year.

"The current fundamentals don't really support the price, but the expectation is the economy will improve and demand will improve," said Gerard Rigby, an energy analyst with Fuel First Consulting in Sydney.

U.S. crude inventories unexpectedly fell last week, a sign demand could be rebounding.

Inventories dropped 1.4 million barrels last week, the American Petroleum Institute said late Tuesday. Analysts expected the API numbers to gain 1.2 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

The EIA reports mandatory supply figures on Wednesday, while the API numbers are reported by refiners voluntarily.

In other Nymex trading, gasoline for September delivery was steady at $2.04 a gallon and heating oil fell 1.07 cents to $1.90. Natural gas for September delivery gained 3.1 cents to $3.51 per 1,000 cubic feet.

In London, Brent prices fell 16 cents to $72.30 a barrel on the ICE Futures exchange.