Oil hovers near 8-month low below $84

June 5, 2012 - 7:45 AM

Oil hovered below $84 a barrel Tuesday, wavering near an eight-month low as doubts remain whether European leaders can contain the continent's debt and economic crisis.

By early afternoon in Europe, benchmark oil for July delivery was down 24 cents to $83.74 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 75 cents to settle at $83.98 in New York on Monday.

In London, Brent crude for July delivery was down 77 cents at $98.08 per barrel on the ICE Futures exchange.

Crude fell below $82 Monday, the lowest since October. Expectations that a global economic slowdown will reduce demand for crude dragged prices down 23 percent in the last month.

Investors are hoping European policymakers can stem a debt crisis that has sent Greece into a deep recession and stalled growth in several other countries.

Finance officials from the Group of Seven industrialized powers are scheduled to hold emergency talks by phone Tuesday. Traders will also closely watch a European Central Bank policy meeting Wednesday and congressional testimony from U.S. Federal Reserve Chairman Ben Bernanke on Thursday.

"We will expect some additional choppy, sideways trade as this week proceeds," energy trader and consultant Ritterbusch and Associates said in a report. "We do feel that this pronounced bear market of the past month remains much alive."

Later this month, Greek elections, a quarterly OPEC meeting and another round of talks between Iran and world powers about that country's nuclear program will likely affect oil prices.

"Prices have meanwhile reached a level which from a longer-term perspective would appear attractive and should thus stimulate buying interest," said analysts at Commerzbank in Frankfurt.

Investors will also be monitoring fresh information on U.S. stockpiles of crude and refined products.

Data for the week ending June 1 is expected to show a draw of 1 million barrels in crude oil stocks and a build of 500,000 barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.

The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration — the market benchmark — will be out on Wednesday.

In other energy trading, heating oil was down 1.1 cents at $2.6159 per gallon while gasoline futures slid 1.64 cents at $2.6543 per gallon. Natural gas gained 0.5 cent at $2.42 per 1,000 cubic feet.

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Alex Kennedy in Singapore contributed to this report.