Oil below $99 as trader eye weak Europe economy

Oil prices hovered below $99 a barrel today in Asia amid concern Europe's debt crisis will undermine the continent's economic growth and crude demand.

Benchmark crude for December delivery was down 15 cents at $98.67 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange.

The contract fell $3.77 to settle at $98.82 in New York yesterday.

Brent crude for January delivery was down 7 cents at $108.15 a barrel on the ICE Futures Exchange in London.

Crude jumped to above $103 yesterday before pulling back as Spanish and French sovereign debt yields rose sharply higher.

Investors are increasingly worried austerity measures to contain debt levels could trigger a recession in Europe.

"Crude values will remain subject to the vagaries of increasing debt problems across the euro zone," Ritterbusch and Associates said in a report.

"Economic deterioration in southern Europe is capable of offsetting positive economic vibes within the U.S."

Oil has surged from $75 on October 4 amid signs the US economy is growing slowly and will avoid a recession this year.

In other Nymex trading, heating oil rose 0.2 cent to $3.09 per gallon and gasoline futures slid 0.7 cents to $2.51 per gallon. Natural gas gained 2.4 cents at $3.43 per 1,000 cubic feet.