Oil prices rebound in Asian trading

Oil prices rebounded Monday in Asia, bouncing back from a flurry of late selling Friday that came on concerns oil market fundamentals do not support recent high prices.

Photo: Oil prices rebound in Asian trading

Light, sweet crude for November delivery gained 24 cents to US$81.90 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore.

The contract fell US$1.22 to settle at US$81.66 a barrel Friday, ending last week's rally to near record levels.

Oil prices peaked at a record US$83.90 in late September, and prices drove back to near US$83 a barrel last week on the steadily weakening dollar, supply concerns, unrest in Nigeria and tensions between the U.S. and Iran.

Analysts said market fundamentals do not support such high prices. While U.S. oil inventories are falling, many say that is typical for this time of year. Oil inventories are 1.3 percent below year-ago levels, but oil prices are more than US$20 a barrel higher.

Nymex crude also rallied late last week as a tropical depression near Mexico raised concerns about possible disruptions to oil and gas production and shipments. Prices ended the week flat as the hurricane threats dissipated.

With no new factors emerging to disrupt critical gas and oil infrastructure, energy investors are closely monitoring the U.S. and global economies to see if the subprime mortgage crises has caused an economic slowdown that could affect demand for oil and gasoline.

Oil and other commodities denominated in dollars are actually falling in price in the eyes of foreign investors, because the greenback has been sliding against other currencies since the Federal Reserve cut interest rates last month.

The dollar fell further on Friday on expectations that a weak U.S. economy means another rate cut is coming.

November Brent crude rose 26 cents to US$79.43 a barrel on the ICE futures exchange in London.

Heating oil futures rose 0.89 cent to US$2.2345 a gallon (3.8 liters) while gasoline prices climbed 0.89 cent to US$2.0500 a gallon. Natural gas futures gained 3.8 cents to US$6.908 per 1,000 cubic feet.