Oil steady below $83 as stock market rally cools

AP News
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Posted: Oct 15, 2010 3:47 AM
Oil steady below $83 as stock market rally cools

Oil prices hovered below $83 a barrel Friday in Asia as a global stock rally stumbled and the U.S. dollar stabilized.

Benchmark oil for November delivery was up 19 cents at $82.88 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract lost 32 cents to settle at $82.69 on Thursday.

Oil prices broke above $80 last month as crude traders took their cues from surging stock markets and a weakening dollar, which makes dollar-based commodities such as oil cheaper for investors with foreign currencies.

However, the Dow Jones industrial average was flat Thursday and Asian stock markets were mostly lower. The euro was higher at $1.4076 from $1.4038 the previous day while the dollar dropped to 81.24 yen from 81.56 yen.

Organization of the Petroleum Exporting Countries, which produce about 40 percent of the world's crude, said at a meeting Thursday in Vienna that it would leave crude production targets unchanged.

Some analysts expect the sluggish economic recovery in developed countries will undermine consumer demand and keep oil under the mid-$80s.

"With oil production to remain the same and the global economy hanging on, I see the price of oil staying between the range of $85 and $75 for the near future," said Mike Sander of Sander Capital Advisors.

Goldman Sachs reiterated its recommendation to buy the December crude contract, and it sees prices rising to $92 in three months and $101 in 12 months.

"We expect the supply-demand balance to continue to tighten in the fourth quarter as continued global economic growth _ albeit likely at a slower pace than in the first half _ continues to strengthen demand," Goldman Sachs said in a report.

In other Nymex trading in November contracts, heating oil fell 0.14 cent to $2.283 a gallon and gasoline rose 0.61 cent to $2.143 a gallon. Natural gas gained 1.2 cents to $3.669 per 1,000 cubic feet.

In London, Brent crude dropped 35 cents to $83.85 a barrel on the ICE Futures exchange.