Oil hovers below $98 amid mixed US demand signs

Oil prices hovered below $98 a barrel today in Asia amid mixed signs about the strength of US crude demand.

Benchmark crude for March delivery was down 1 cent at $97.60 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 87 cents to settle at $97.61 yesterday.

Brent crude was steady at $111.56 a barrel on the ICE Futures Exchange in London.

A jump of US crude inventories last week by 4 million barrels suggested oil consumption is sluggish. However, factories raised output in January by the most in seven months, the Institute for Supply Management said Wednesday while the Commerce Department said construction spending rose 1.5% in December, the fifth straight monthly gain.

Oil prices have hovered near $100 for the last few months amid mixed economic signs from the US, Europe and Asia. Some analysts expect crude to begin to rise as the global economy may grow more this year than previously expected.

"The crude oil price has become stuck in a remarkably extended period of narrow sideways trading," Barclays Capital said in a report. "However, the market is now likely to start to position for an upside break based on a greater degree of relaxation about macroeconomic prospects."

In other energy trading, heating oil rose 1.4 cents to $3.06 per gallon and gasoline futures were up 0.3 cents to $2.90 per gallon. Natural gas gained 0.8% to 2.39 per 1,000 cubic feet.