Oil falls to near $70 as traders eye US economy

Oil prices fell to near $70 a barrel today in Asia as signs of a sluggish US economic recovery discouraged stock and crude investors.

Benchmark crude for November deliver was down 63 cents at $70.19 by midday in Singapore in electronic trading on the New York Mercantile Exchange. The contract added 21 cents to settle at $70.82 yesterday.

Crude has weaved around $70 for months amid mixed signals about the strength of the US economic recovery. Yesterday, poor economic data sparked a sell-off in US stock markets.

The Labour Department said new claims for jobless benefits rose last week to 551,000, more than analysts expected. And the Institute for Supply Management said its index of manufacturing activity in September fell when analysts had expected an increase.

The Dow Jones industrial average fell 2.1 per cent yesterday while most Asian stock markets slid in early trading today.

"At $70 a barrel, investors have priced in a fairly sharp economic recovery," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.

"That makes it vulnerable to bad economic news."

Investors will be closely analysing the government's monthly jobs report, which is scheduled to be released later today.