An employee in silhouette at an oil refinery in Norco, Louisiana (Photo: Reuters)
Oil prices hovered above $98 a barrel Thursday in Asia amid speculation about a possible new round of U.S. monetary stimulus while a rating agency put the country's credit rating under review for a downgrade.
Benchmark oil for August delivery was up 12 cents to $98.17 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange.
Crude rose 62 cents to settle at $98.05 on Wednesday. In London, Brent crude fell 3 cents to $118.75 per barrel on the ICE Futures exchange.
Federal Reserve Chairman Ben Bernanke said Wednesday he is considering another round of Treasury bond purchases, known as quantitative easing, in a bid to lower interest rates and spur lending and economic growth.
A previous round of quantitative easing, which began last year and ended last month, helped lead to a weaker dollar and higher oil prices, since a cheaper U.S. currency makes commodities such as crude less expensive to investors with other currencies.
Weighing on crude prices was a threat by Moody's Investors Service on Wednesday to lower the United States' credit rating, saying there is a small but rising risk that the government will default on its debt.
Moody's said it will review the U.S. government's triple-A bond rating because the White House and Congress are running out of time to raise America's $14.3 trillion borrowing limit and avoid a default.
Some analysts expect crude will fall in the second half as global economic growth stalls. Capital Economics forecasts Brent will drop below $90 by the end of the year.
"We expect a substantial fall in the price of oil as global demand remains sluggish, supply recovers from shocks, and the dollar regains more ground," Capital Economics said in a report.
In other Nymex trading in August contracts, heating oil added 0.3 cent at $3.10 a gallon while gasoline dropped 0.8 cents at $3.14 a gallon. Natural gas futures slid 2.7 cents at $4.38 per 1,000 cubic feet.