Oil hovers above $63 in Asia amid rising US crude inventories, sluggish economy

Oil hovers above $63 amid weak US crude demand

SINGAPORE — Oil prices paused above $63 a barrel Thursday in Asia after signs of weak U.S. crude demand triggered a sharp sell-off this week.

Benchmark crude for September delivery was down 15 cents to $63.20 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Wednesday, the contract fell $3.88 to settle at $63.35.

Crude prices have slid from above $69 earlier this week on investor concerns that a slow recovery from a severe recession will undermine demand from the U.S.

More evidence emerged on Wednesday that drivers may be cutting back on gasoline consumption when the Energy Information Administration said crude supplies in the U.S. grew by 5.1 million barrels last week, or about 18 percent above last year’s levels.

“U.S. demand remains weak, with little prospect for demand growth, and inventories are at historically high levels,” said David Donora, executive director of commodities for London-based Threadneedle, which manages about $80 billion of assets.

Investors are also seeing signs that the U.S. economy may struggle the rest of the year. On Wednesday, the government reported that orders to factories in June for big-ticket durable goods plunged by 2.5 percent, the largest drop in five months and bigger than analysts expected.

In other Nymex trading, gasoline for August delivery rose 0.50 cent to $1.86 a gallon and heating oil was steady at $1.68. Natural gas for August delivery held at $3.54 per 1,000 cubic feet.

In London, Brent prices rose 7 cents to $66.60 a barrel on the ICE Futures exchange.