Oil falls to near $95 per barrel on economy

Associated Press

NEW YORK (AP) — The price of oil dropped Friday but remained close to four-month highs after new data showed China's economy rebounded in the final quarter of the year.

Benchmark oil for February delivery fell 44 cents to $95.05 per barrel on the New York Mercantile Exchange at midday.

Crude finished at $95.49 a barrel Thursday, the highest since Sept. 17, on more evidence that the housing and jobs market are recovering.

Prices have remained steady at the pump, however, with the average price for a gallon of regular drifting down from $3.31 a week ago to $3.29 on Friday. That right about where it started the year.

On Friday the global economy took center stage for energy traders. The economy of China, the second largest energy consumer in the world behind the U.S., grew by 7.9 percent in the fourth quarter, up from the previous quarter's 7.4 percent, according to China's National Bureau of Statistics.

The prospect of more oil demand from China helped push up an oil consumption forecast from the International Energy Agency. Global oil demand is expected to rise to 90.8 million barrels a day this year, according to the IEA in Paris, which released its monthly report Friday. That's 930,000 daily barrels more than in 2012 and 240,000 more than the agency's previous forecast released in December.

Lingering concerns about the U.S. economy may be weighing on crude prices Friday, with lawmakers wrangling over spending cuts and the nation's debt ceiling. After a week in which the S&P 500 index repeatedly set new five-year highs, investors on Wall Street pulled back as well. Major indexes fell slightly in midday trading.

Independent analyst Jim Ritterbusch said the current price for a barrel of oil may be unsustainable.

"The market appears to be sending off signals that some assistance from continued stock market gains and a weakening US dollar will be needed if this advance is to continue."

Natural gas futures rose, however. The price is up about 6 percent in the past week with a chillier forecast pointing to heavier use of the thermostat in many parts of the country.

Energy analyst Addison Armstrong points out that below-normal temperatures are expected in February across the Midwest and Chicago, the nation's largest gas-consuming region.

Natural gas rose 2 cents on Friday to $3.51 per 1,000 cubic feet.

Meanwhile, Brent crude, used to price international varieties of oil, fell 32 cents to $110.78 per barrel on the ICE Futures exchange in London.

In other energy futures trading on Nymex:

— Wholesale gasoline was unchanged at $2.77 a gallon.

— Heating oil was flat at $3.02 a gallon.

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Pamela Sampson in Bangkok AND Pablo Gorondi in Budapest contributed to this report.

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