Oil near $97 amid light Thanksgiving volume

AP News
Posted: Nov 24, 2011 3:50 AM
Oil near $97 amid light Thanksgiving volume

Oil prices rose slightly to near $97 a barrel Thursday in Asia amid light trading volume ahead of a U.S. holiday.

Benchmark crude for January delivery was up 43 cents at $96.60 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $1.84 to settle at $96.17 in New York on Wednesday.

Brent crude for January delivery rose 50 cents to $107.52 a barrel on the ICE Futures Exchange in London.

Markets in the U.S. are closed Thursday for the Thanksgiving holiday.

Crude has fallen from above $103 last week amid investor concern that Europe's debt crisis will undermine global economic growth and oil demand.

However, crude inventories have dropped in recent months in the U.S. and Europe. Crude supplies fell by 6.2 million barrels last week and are about 8 percent below year-earlier levels, the Energy Department's Energy Information Administration said Wednesday.

"The low inventory situation has prevented oil prices from falling sharply," Bank of America Merrill Lynch said in a report. "But eventually, deteriorating financial conditions could start to impact economic activity and bring oil prices somewhat lower."

Bank of America said it expects Brent crude to average $104 in the first quarter of next year.

Some analysts predict robust growth in demand for commodities from developing countries will outstrip production capacity increases and push prices higher.

"We believe that the oil market has been too focused on the downside risks to prices and not focused enough on the upside risk should the economy avoid recession," Goldman Sachs said in a report.

In other Nymex trading, heating oil rose 1 cent to $2.98 per gallon and gasoline futures gained 2.4 cents to $2.54 per gallon. Natural gas was steady at $3.61 per 1,000 cubic feet.