Oil idles near $98 amid debt, China growth jitters

SINGAPORE—Oil prices hovered above $98 a barrel Tuesday in Asia as concern grew that Europe’s debt crisis is worsening and Chinese demand for crude showed signs of waning.

Benchmark oil for July delivery was up 54 cents to $98.24 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. In London, Brent crude for July delivery was up 65 cents to $110.75 a barrel on the ICE Futures exchange.

The benchmark contract lost $2.40 to settle at $97.70 on Monday as the dollar strengthened amid growing investor concern about Europe’s debt crisis. Crude also fell on fears China’s economic expansion is slowing after Platts, the energy information arm of McGraw-Hill Cos., reported that growth in crude consumption fell in April.

Slowing economic growth in the US, Europe and China will likely hurt oil consumption and push oil prices down in the second half, said Richard Soultanian of NUS Consulting, who expects crude to average $88 in the fourth quarter.

“The risk of a significant pullback in both the commodities and equities markets is uncomfortably high,” Soultanian said. “The decline in the past weeks is the canary in the coal mine indicating that energy markets will undergo a more sustained and consistent decline in the coming months.”

Oil has dropped from a 30-month high near $115 a barrel on May 2.

In other Nymex trading in June contracts, heating oil rose 2.2 cents to $2.87 a gallon and gasoline dropped 1.0 cent to $2.95 a gallon. Natural gas futures fell 1.0 cent to $4.34 per 1,000 cubic feet.