Oil hovers above $86 amid Europe debt plan doubts

AP News
Posted: Oct 18, 2011 3:24 AM
Oil hovers above $86 amid Europe debt plan doubts

Oil prices hovered above $86 a barrel Tuesday in Asia after comments from Germany that downplayed a possible plan to contain Europe's debt crisis.

Benchmark crude for November delivery was down 24 cents at $86.14 a barrel at afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 42 cents to settle at $86.38 in New York on Monday.

Brent crude for December delivery was up 20 cents at $110.36 a barrel on the ICE Futures Exchange in London.

Crude has risen from $75 two weeks ago as investors bet European leaders will soon announce a plan that will stem the contagion from a possible Greek sovereign debt default. However, German finance chief Wolfgang Schaeuble on Monday dampened expectations that they'd hammer out a comprehensive solution at an upcoming summit this weekend.

The Dow Jones industrial average fell 2.1 percent Monday on the news and Asian stock markets fell Tuesday.

"We feel that the continued huge question mark behind efforts to address euro zone sovereign debt issues will ultimately push both equities and oil values back down to around the early October lows," energy consultant Ritterbusch and Associates said in a report. "The slightest headline out of a leading member such as Germany can prompt a sharp price decline."

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Traders were also mulling the latest economic growth figures from China. Gross domestic product expanded 9.1 percent in the third quarter, the slowest pace in two years.

In other Nymex trading, heating oil added 0.8 cents to $3.02 per gallon and gasoline futures gained 0.8 cent to $2.72 per gallon. Natural gas fell 0.4 cent to $3.69 per 1,000 cubic feet.