Oil hovers below $83 ahead of Fed chief speech

By BARRY HATTON

Oil prices hovered below $83 a barrel Friday as markets awaited pointers from the Federal Reserve chairman about how the central bank intends to add momentum to the U.S. economic recovery.

By early afternoon in Europe, benchmark crude for November delivery was up 4 cents to $82.73 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 32 cents to settle at $82.69 on Thursday.

Disappointing economic news drove crude prices lower, and investors anticipated that a speech later Friday by U.S. central bank chief Ben Bernanke would provide guidance on economic prospects and policy.

The Organization of the Petroleum Exporting Countries, which produces about 40 percent of the world's crude, said Thursday it would leave crude production targets unchanged amid a patchy economic upturn that has prolonged uncertainty about future demand.

Some analysts expect the sluggish economic recovery in developed countries will undermine consumer demand and keep oil under the mid-$80s.

"Although the price has been traded above the mark of $80 for two weeks without cease, the upwards momentum has come to a stop, which is comprehensible in view of the fundamental situation on the oil market. There is still no sign of a shortage in supply," Commerzbank said in a report.

A weaker U.S. dollar, pushed lower by speculation the Fed might take steps to lower interest rates, has supported crude prices recently as investors jumped into commodities such as oil.

Most OPEC members are paid for their oil in dollars, and the group's Secretary General Abdalla El-Badri said Friday the dollar's slide has alarmed them.

OPEC members "are very concerned about the matter," he said.

Goldman Sachs sees prices rising to $92 in three months and $101 in 12 months.

"We expect the supply-demand balance to continue to tighten in the fourth quarter as continued global economic growth -- albeit likely at a slower pace than in the first half -- continues to strengthen demand," it said in a report.

In other Nymex trading in November contracts, heating oil was steady at $2.283 a gallon and gasoline rose 0.62 cent to $2.143 a gallon. Natural gas gained 0.4 cent to $3.661 per 1,000 cubic feet.

In London, Brent crude dropped 15 cents to $84.05 a barrel on the ICE Futures exchange.

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Associated Press writers Alex Kennedy in Singapore and George Jahn in Vienna contributed to this report.

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