Oil prices steady near US$70 a barrel in Asia

SINGAPORE (AP): Oil prices were steady Friday following an overnight rebound as a more stable stock market alleviated traders' worries about an economic slump dampening demand.

Light, sweet crude for October delivery gained 1 cent to US$69.84 a barrel in Asian electronic trading on the New York Mercantile Exchange, midmorning in Singapore. The contract rose 57 cents to settle at US$69.83 a barrel Thursday.

The energy markets have fallen recently despite the threat of hurricanes, with many investors betting that credit might be tightening so much as to stifle growth. Traders worry a slowdown in the U.S. economy will likely hurt energy demand.

But "with no real signs of a major downturn in demand the market selling was ahead of (itself). What really went on was an aversion to risk as commodity funds offset positions," said Phil Flynn, an analyst with Alaron Trading Corp. in a daily note to clients.

Crude futures rose Thursday along with stocks boosted by optimism over Bank of America Corp.'s US$2 billion capital infusion into Countrywide Financial Corp., one of the largest U.S. mortgage lenders. Countrywide had recently struggled to raise the financing needed to run its business.

The investment was seen as a way to not only prop up Countrywide, but also prevent any further losses at the mortgage lender from hurting the underlying economy. Still, Wall Street ended slightly lower Thursday, while crude maintained its positive trend.

Some analysts have said there were concerns in the market about weakening demand in the coming weeks or months, with the winding down of the summer peak driving season and predictions the Northern Hemisphere winter could be a mild one.

But supplies of crude oil and gasoline are much tighter, and gasoline demand, despite all of the market's jitters about the consumer, was at an all-time high last week, according to U.S. Energy Department data. So if another Atlantic hurricane does veer toward the U.S. oil facilities scattered along the Gulf Coast, investors who took their money out of the energy markets to make up for losses elsewhere might feel inclined to put it back in – which could eventually mean higher gasoline prices for consumers.

Following the passage of Hurricane Dean, two of Mexico's three main oil-exporting ports in the southern Gulf of Mexico were reopened Thursday, officials said. Production was still suspended as officials assessed possible damage to offshore rigs, but it is expected to resume soon.

Heating oil futures dropped 0.25 cent to US$1.9585 a gallon (3.8 liters) while gasoline prices rose 0.68 cent to US$1.93 a gallon.

Natural gas prices fell 3.9 cents to US$5.583 per 1,000 cubic feet. (**)