Oil holds near 2012 low after downward spiral

New York: The price of oil held near the lowest levels of the year on a quiet Friday ahead of a holiday weekend in the US.

Benchmark US crude on Friday added 20 cents to finish the week at $90.86 (Dh333.75) per barrel in New York while Brent crude rose by 28 cents to end at $106.83 per barrel in London.

Both crude varieties have tumbled this month on forecasts of weaker world demand and higher supplies. US crude closed on Wednesday at $89.90, its lowest close since October.

Prices fell in May as the economies of the two biggest oil consumers — the US and China — showed signs of slowing. And many analysts are betting the European Union will fall into a recession as it struggles with massive government debts. Meanwhile, some of the world's largest oil producing countries have been exporting more crude this year, boosting supplies.

Iran also appears to be interested in defusing tensions over its nuclear programme. Tough talk between Iran and the West pushed oil prices higher earlier this year. The US and other world leaders fear Iran is building a nuclear weapon, a charge the oil-rich country denies. Negotiators for the two sides made little progress last week but agreed to further talks, which analysts consider a promising sign.

Gene McGillian, a broker and oil analyst at Tradition Energy, said many investors will avoid making new bets on oil until they get an updated look at the US economy. They will most likely wait for this week's reports on employment, personal incomes and housing, McGillian said.

"People also will be looking to see if we'll have a pickup in gasoline demand following the Memorial Day weekend," he said.

In the US, retail petrol prices fell by a penny to $3.666 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded has declined by 27 cents since the first week of April, giving motorists some last-minute relief at the pump before Memorial Day weekend.

In other futures trading, natural gas fell by 7.9 cents, or 3 per cent, to finish at $2.568 per 1,000 cubic feet. Analysts cited government weather forecasts that show temperatures this week could be lower than previously expected.

If the weather is cool, fewer people will use their air conditioners, and that will lower demand for natural gas-generated electricity.