Oil hovers below $69 amid weak crude demand

SINGAPORE — Oil prices hovered below $69 a barrel Tuesday in Asia as investors weighed concerns about weak crude demand against optimism of a global economic recovery.

Benchmark crude for October delivery was down 1 cent at $68.84 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Monday, the contract fell 43 cents to settle at $68.86.

Oil has meandered between $65 and $75 this summer as crude supplies rose and traders eyed slumping consumer spending.

U.S. oil inventories are higher now than in May, and analysts expect demand to drop off in the autumn following the summer driving season.

“Inventory levels are still at historical highs, reflecting sluggish demand,” said Jan Lambregts, global head of financial markets research for Rabobank in Hong Kong.

Lambregts said he expects oil near $70 a barrel at the end of this year and between $80 and $85 by the middle of next year.

Investors will be looking at supply data from the American Petroleum Institute late Tuesday and the Energy Information Agency on Wednesday for clues about the consumption trend. Analysts expect inventories to drop 3.0 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

Crude investors have also been mulling the U.S. dollar, which fell to its lows of the year last week. The dollar rebounded late last week, sparking a $4 drop in oil prices.

The euro fell slightly Tuesday to $1.4611 from 1.4627 the previous day while the dollar held near 91 yen.

In other Nymex trading, gasoline for October delivery fell 0.55 cent to $1.74 a gallon, and heating oil dropped 0.58 cent to $1.74 a gallon. Natural gas surged 13.2 cents to $3.43 per 1,000 cubic feet.

In London, Brent crude was fell 44 cents to $67.00.