Oil edges higher in Asia

Agence France-Presse

Posted at Aug 25 2010 12:16 PM | Updated as of Aug 25 2010 08:16 PM

SINGAPORE - Oil recovered in Asian trade Wednesday but prices remained under $72 amid worries about the fragile US economy, analysts said.

New York's main contract, light sweet crude for October delivery, gained 24 cents to $71.87. The contract closed Tuesday at $71.63, its lowest since June 7.

Brent North Sea crude for October was 23 cents higher at $72.61 a barrel. It closed Tuesday $1.24 lower at $72.38.

"I think sentiment is still bearish," said Ong Yi Ling, an investment analyst with Singapore-based financial services firm Phillip Futures.

"We are looking at economic worries, it will continue to influence prices," she told AFP.

Financial markets were jolted Tuesday by data showing that existing US home sales plunged a whopping 27.2% in July to levels unseen in more than a decade, increasing concern about a double-dip recession.

The US is a major energy consuming nation and worries are resurfacing that crude demand will be affected if the world's biggest economy veers off the recovery track.

"Overall, it is becoming abundantly clear that the housing market is undermining the already faltering wider economic recovery," said Paul Dales, an economist with Capital Economics research consultancy.

"With the increasingly inevitable double-dip in prices yet to come, things could yet get a lot worse," he said in a market commentary.

The White House described as "tough" the latest data tracking the housing sector, which was at the epicenter of the financial crisis, and vowed to do everything possible to keep the recovery on track.

Investors are watching out for the release later Wednesday of a widely-watched Department of Energy weekly oil inventories report.

Analysts expect the report to show that crude oil and distillates stockpiles grew last week, but that gasoline inventories fell by nearly a million barrels in the period.