Oil Prices Sag Below $93 A Barrel

Monday, December 24th 2007, 8:10 am
By: News On 6

LONDON (AP) _ Oil prices fell Monday amid light holiday trading, after rising more than $2 a barrel in the previous session on news of improved U.S. consumer spending.

At midmorning in Europe, light, sweet crude for February delivery was down 45 cents to $92.86 a barrel in electronic trading on the New York Mercantile Exchange.

Japanese financial markets were closed Monday for the emperor's birthday, a national holiday, while trading on some other Asian markets ended early for Christmas Eve. Markets in the U.S. and many other countries will be closed Tuesday for Christmas.

On Friday, the Nymex crude contract rose $2.25 to settle at $93.31 a barrel after the U.S. government reported that consumer spending surged last month, raising hopes that the American economy will weather the crisis roiling credit markets and that demand for oil and gasoline will strengthen.

Oil prices were also supported by stocks, which rose Friday, and a slightly weaker dollar. Energy investors often view stock market moves as reflective of overall economic sentiment. Also, oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling. Many observers blame oil's rise last month to near $100 on speculators driven to oil futures by the weaker dollar.

Crude futures have since retreated as OPEC boosted supplies and several forecasters cut demand predictions. But in recent weeks, prices have held generally to a range between $87 and $93, leading some analysts to conclude investors are seeking direction and may be poised to make another push for $100 a barrel in the new year.

Heating oil futures fell 1 cent to $2.5991 a gallon (3.8 liters) while gasoline prices dropped 0.45 cent to $2.375 a gallon.

Natural gas futures dropped 11.3 cents to $7.077 per 1,000 cubic feet.

In London, February Brent crude fell 48 cents to $091.98 a barrel on the ICE Futures exchange.