Oil hovers above $96 amid Europe debt worries

November 25, 2011 - 2:00 AM

SINGAPORE (AP) — Oil prices hovered above $96 a barrel Friday in Asia as Europe's debt crisis undermined confidence the continent will avoid recession next year.

Benchmark crude for January delivery was up 29 cents at $96.46 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract last settled on Wednesday in New York at $96.17, down $1.84. Markets in the U.S. were closed Thursday for the Thanksgiving holiday.

Brent crude for January delivery rose 73 cents at $107.77 a barrel on the ICE Futures Exchange in London.

Markets close early in the U.S. on Friday for Thanksgiving.

Investor concern that fiscal austerity measures to lower Europe's debt levels will hurt global economic growth and oil demand has helped pull crude back from above $103 last week.

Credit ratings agency Fitch downgraded Portugal's long-term debt rating to BB+ from BBB-, following a similar move recently by Moody's.

Uncertainty about contagion spreading from Greece to Portugal, Italy, Spain and Ireland has begun to undermine confidence in Germany and France. The yield on Germany's 10-year bond rose above the 10-year UK government bond for the first time since 2009.

"The eurozone sovereign crisis is starting to threaten the bond markets of even the most solid European economy — Germany," Barclays Capital said in a report.

In other Nymex trading, heating oil rose 1.1 cents to $2.98 per gallon and gasoline futures gained 0.2 cent to $2.52 per gallon. Natural gas lost 0.3 cent to $3.46 per 1,000 cubic feet.