Oil below $89 though US crude supplies drop (AP) (05-01-2011)

SINGAPORE – Oil prices fell below $89 a barrel on Wednesday in Asia extending losses from the previous session though there were signs of improvement for U.S. crude demand.

Benchmark oil for February delivery fell 48 cents to $88.90 a barrel late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract lost $2.17 to settle at $89.38 on Tuesday.

According to the American Petroleum Institute, crude inventories fell 7.5 million barrels last week while the the energy information arm of McGraw-Hill Cos. had forecast a drop of 1.6 million barrels.

Inventories of gasoline rose 5.6 million barrels and distillates added 2.2 million barrels.

After falling for five weeks, crude supplies stay still above levels from the previous year and crude is expected to trade between $80 and $100 this year.

In other Nymex trading in February contracts, heating oil slid 1.2 cents to $2.49 a gallon while gasoline futures skidded 2.5 cents to $2.39 per gallon. February natural gas futures fell 6.5 cents to $4.60 per 1,000 cubic feet.

In London, Brent crude was down 39 cents to $93.14 a barrel on the ICE Futures exchange.

Source: AP