Oil back above $96 in Asia

SINGAPORE: Oil traded higher in Asia today but the rise was capped after a new warning that the economy in the United States, the world's largest consumer of energy, would slow, dealers said.

In early trades New York's main contract, light sweet crude for December delivery, rose 97 cents to 96.43 US dollars a barrel from 95.46 in US trades yesterday.

Comments by Federal Reserve chairman Ben Bernanke that the US economy could face further strains from the housing slump was a reminder to traders that oil demand in the United States may be hit, dealers said.

"As more banks are confessing billions more in credit losses once again, the perceived health of the US economy will drive the near term fortunes on oil," said Phil Flynn, an analyst with trading firm Alaron.

Speaking to Congress yesterday, Bernanke said the world's biggest economy could face more headwinds from the housing slump even as oil prices threaten to push inflation higher.

He said Fed policymakers decided last month to cut interest rates because they "expected that the growth of economic activity would slow noticeably in the fourth quarter."

Oil prices spiked to an all-time high of 98.62 dollars on Wednesday on tight global supplies but fresh concerns about the United States have since halted the market's bull run.