Oil Hovers below $98 in Asia

Oil prices hovered below $98 a barrel Tuesday in Asia as traders mulled how much Europe''s debt crisis will hurt the continent''s economic growth and crude demand. Benchmark crude for January delivery was up 7 cents to $97.84 a barrel in midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $1.64 to settle at $97.77 on Monday. In London, Brent crude was steady at $107.26 on the ICE futures exchange. Crude has slumped from $103 last month amid growing investor concern European leaders may be unable to prevent contagion from spreading from debt-ridden countries such as Greece and Italy. Europe has proposed a new treaty to bind members to spending and borrowing controls, but Britain has refused to consider it, raising doubts that the plan will be instituted. Credit ratings agency Moody''s said Monday that its ratings for European countries could be cut in coming months, echoing an earlier warning by Standard and Poor''s. Citigroup said slowing global crude demand growth and supplies boosted by the gradual return of Libya''s output will likely keep oil trading next year within 10% of current prices, or between $100 and $120 for Brent. "We are not very optimistic on oil demand growth," Citigroup said in a report. "We are, however, optimistic on supply." A possible supply disruption from Iran and Saudi Arabia''s shrinking spare capacity should support crude prices next year, Citi said. In other energy trading on the Nymex, natural gas rose 1.1 cents at $3.27 per 1,000 cubic feet. Heating oil fell 0.1 cent to $2.90 a gallon and gasoline futures rose 1.3 cents to $2.58 a gallon