SINGAPORE (AP) — Oil prices hovered near $98 a barrel Tuesday in Asia amid expectations that U.S. crude inventories are falling in a sign demand could be increasing.
Benchmark crude for December delivery was up 2 cents at $98.16 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 85 cents to settle at $98.14 in New York on Monday.
Brent crude was up 30 cents to $112.19 a barrel on the ICE Futures Exchange in London.
Crude has surged about 30 percent from $75 on Oct. 4 amid growing investor optimism that the U.S. economy would avoid recession this year. Traders are now mulling whether weak economic growth will boost demand enough to justify further price gains.
Falling crude inventories in the U.S. and Europe suggest supplies aren't keeping up with demand. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., predict crude stocks fell 1.5 million barrels last week.
The American Petroleum Institute reports its weekly supply figures later Tuesday and the Energy Department's Energy Information Administration announces its data on Wednesday.
"Unexpectedly resilient economic data has exacerbated the tightness in physical commodities," Goldman Sachs said in a report. "We maintain our view that global growth will provide enough support to demand to drive key commodity prices higher over the next 12 months."
Goldman recommended investors buy the December 2012 crude futures contract.
In other Nymex trading, heating oil added 1.5 cents to $3.18 per gallon and gasoline futures fell 0.5 cents to $2.54 per gallon. Natural gas fell 2.4 cents at $3.43 per 1,000 cubic feet.