Oil hovers below $84 as traders eye China economy

Oil hovers below $84 as traders eye China economy

Singapore: Oil prices hovered below $84 a barrel Friday in Asia as traders mulled how much economic growth in China may slow next year and drag down demand for crude.

Benchmark oil for January delivery was down 10 cents to $83.76 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract last settled at $83.86 on Wednesday after gaining $2.61.

Markets in the US were closed Thursday for the Thanksgiving holiday. Markets reopen Friday, but trading volume is often light because many traders take the day off.

China’s energy consumption has led growth in global oil demand this year, but investors are worried that recent measures aimed at containing inflation will undermine its economic expansion.

China’s gross domestic product growth, which has averaged about 10% a year for the last five years, will likely slow next year to between 8% and 9%, Capital Economics said in a report.

“Even though we are not as pessimistic as some on the prospects for China, we still expect commodity prices to drop back further next year," Capital Economics said. “If inflation rises much further and remains high, a period of sub-8 percent GDP growth will become increasingly likely."

In other Nymex trading in December contracts, heating oil fell 0.7 cent to $2.32 a gallon and gasoline added 0.1 cent at $2.16 a gallon. Natural gas rose 1.1 cents to $4.40 per 1,000 cubic feet.

In London, Brent crude dropped 43 cents to $85.67 a barrel on the ICE Futures exchange.