Oil near $87 ahead of Europe central bank meetings

Associated Press
An oil pump works in the Sakhir, Bahrain, desert oil fields at sunset Tuesday, July 3, 2012. The price of oil jumped more than 4 percent Tuesday to the highest level since May on renewed fears of a military conflict with Iran. (AP Photo/Hasan Jamali)
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An oil pump works in the Sakhir, Bahrain, desert oil fields at sunset Tuesday, July 3, 2012. The price of oil jumped more than 4 percent Tuesday to the highest level since May on renewed fears of a military conflict with Iran. (AP Photo/Hasan Jamali)

SINGAPORE (AP) — Oil fell to near $87 a barrel Thursday in Asia as investors waited for word on whether European central bankers will take measures to boost flagging economic growth.

Benchmark oil for August delivery was down 65 cents at $87.01 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude rose $3.91 to close at $87.66 on Tuesday, the last day the August contract settled in New York.

In London, Brent crude for August delivery was up 1 cent at $99.78 per barrel on the ICE Futures exchange.

Analysts expect the European Central Bank and the Bank of England to either cut lending rates or boost money in circulation at meetings later Thursday. Europe's weak economy and the continent's debt crisis have helped pull oil prices down from $106 two months ago.

The U.S. Energy Department's Energy Information Administration announces its weekly report later Thursday on the latest U.S. crude supply figures.

The American Petroleum Institute said late Tuesday that crude inventories fell 3 million barrels last week while stocks of gasoline fell 1.4 million barrels.

U.S. gasoline "supplies are low, but demand is even lower," energy trader and consultant The Schork Group said in a report.

Growing tensions between Iran and Western powers over that country's nuclear program also have the potential to shake the oil market. Iran said Wednesday that it can destroy nearby U.S. military bases and strike Israel within minutes of an attack on the Islamic Republic.

Europe implemented a ban on buying Iranian crude July 1 and Iran responded by conducting war games exercises that included test-firing several ballistic missiles.

The U.S. and Israel have not ruled out a military strike on Iran's nuclear facilities. Several rounds of negotiations this year have failed to yield an agreement over Iran's development of nuclear power.

"The upside to oil prices based on Iranian threats cannot be underestimated," Schork said.

In other energy prices, heating oil was steady at $2.73 per gallon while gasoline futures were little changed at $2.71 per gallon. Natural gas gained 2 cents at $2.93 per 1,000 cubic feet.

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