By ALEX KENNEDY, Associated Press
SINGAPORE (AP) — Oil prices hovered below $106 a barrel Thursday in Asia amid trader concerns that growing U.S. crude supplies reflect weak demand.
Benchmark oil for April delivery was up 34 cents to $105.77 at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $1.28 to settle at $105.43 per barrel in New York on Wednesday.
Brent crude for April delivery was up 7 cents at $125.04 per barrel in London. The April contract expires later today.
The Energy Department's Energy Information Administration said Wednesday crude inventories rose 1.8 million barrels last week. At the key storage facility in Cushing, Oklahoma, supplies rose 2.5 million barrels last week and have jumped 10 million barrels during the last two months.
"The magnitude of the Cushing supply build is beginning to exceed most expectations," energy consultant Ritterbusch and Associates said in a report. "Our previously targets of crude at the $112-113 area are beginning to appear out of reach with Cushing supply mounting."
Oil prices have risen from $75 in October amid investor optimism an improving U.S. economy will boost crude demand. However, the EIA said Wednesday that gasoline demand was down 7.2 percent from a year ago.
Traders have been eyeing in recent weeks the likelihood that a possible military strike by Israel or the U.S. against Iran's nuclear facilities could take some or all of Iran's 4 million barrels a day of crude output off the market.
Saudi Arabia's top oil official sought to assuage those fears Wednesday, saying his country and other oil exporters are ready to produce more to offset any supply shortfall, if needed.
In other energy trading, heating oil was down 0.5 cent at $3.26 per gallon and gasoline futures fell 0.6 cent at $3.34 per gallon. Natural gas slid 3.2 cents at $2.25 per 1,000 cubic feet.
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