Oil drops below USD 85 per barrel

All major Asian stock market indices fell on Friday,led by Japan,China and Hong Kong. China said yesterday it will raise the minimum downpayment on purchases of some residential property and free up more land for construction in a bid to cool soaring housing costs.

A Labour Department report that said initial claims for unemployment benefits rose unexpectedly for a second straight week raised doubts about the strength of the US economic recovery and also weighed on stocks.

Crude traders often look to equity markets as a barometer of overall investor sentiment.

Oil prices have muddled in the mid-USD 80 range since jumping 25 per cent in two months to above USD 87 last week.

“Further price consolidation within about the USD 84 to 87 zone appears likely into next week,” Ritterbusch and Associates said in a report.

In other Nymex trading in May contracts,heating oil rose 0.5 cent to USD 2.247 a gallon,and gasoline held at USD 2.333 a gallon. Natural gas was steady at $4.197 per 1,000 cubic feet.

In London,Brent crude’s June contract was down 34 cents at USD 86.25 on the ICE futures exchange.