Oil languishes near $35 on weak US economy

SINGAPORE: Oil prices languished near $35 a barrel on Friday in Asia as traders eyed a weakening U.S. economy and falling global demand that's sent crude down a third since last week.

Light, sweet crude for February delivery was down 2 cents at $35.38 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange. The contract fell $1.88 overnight to settle at $35.40, after trading as low as $33.20, a five-year low.

Oil prices have fallen about 30 percent since touching $50.47 a barrel last week as dismal economic and corporate results stoked investor fears that a drop-off in crude demand may be worse than expected.

Concerns center on the US, the world's largest consumer of oil, where falling consumer demand and rising unemployment feed each other and undermine demand for crude.

The Labor Department reported on Thursday that first-time requests for unemployment insurance jumped to a seasonally adjusted 524,000 in the week ending Jan. 10. Analysts had expected 500,000 new claims. The department last week said the unemployment rate jumped to 7.2 percent in December, a 16-year high.

``Market pessimism about the international economic outlook is still weighing on the oil price,'' said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney. ``History has shown that these things can move more than you anticipate.''

Oil demand fell last year and is expected to drop again this year.