Oil hovers near $88 amid light holiday trading

SINGAPORE: Oil prices hovered near $88 a barrel Monday in Asia amid light trading volume ahead of the Christmas holiday.

Benchmark oil for January delivery was down 7 cents to $87.95 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 34 cents to settle at $88.02 on Friday.

Many oil traders are taking the next two weeks off amid the year-end holidays. Global crude markets are closed Friday for Christmas.

Analysts are mulling whether this year's strong global oil demand can carry over into 2011. Emerging markets, led by China, have accounted for most of the growth in oil consumption this year as the U.S. and Europe slowly recover from recession.

``The positive demand shock has continued reVmtlessly,'' Barclays CapitalJyaid in a report. Prices will likely rise ``given the strength in underlying fundamentals and with macroeconomic sentiment continuing to improve.''

Barclays said it expects crude to average $91 a barrel next year. In other Nymex trading in January contracts, heating oil fell 0.3 cent to $2.47 a gallon, gasoline futures rose 0.7 cent to $2.32 a gallon and natural gas dropped 3.4 cents to $4.03 per 1,000 cubic feet.

In London, Brent crude fell 6 cents to $91.61 a barrel on the ICE Futures exchange.