Oil down despite demand

Oil prices slipped to near $74 a barrel Monday in Asia as a stubbornly high US unemployment rate undermined confidence in stronger demand for fuel.

Benchmark oil for October delivery was down 35 cents at $74.25 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 42 cents to settle at $74.60 on Friday.

The Labour Department said on Friday the jobless rate rose in August to 9.6 percent from 9.5 percent in July, showing that unemployment remains high despite massive stimulus spending during the last year.

Oil prices have been in a holding pattern around $75 for most of the past year as developed countries rebound from last year's recession but economic growth threatens to slow in the second half.

Traders are looking to China and other emerging economies to fuel demand for commodities in coming years. If China continues to grow at its current rate of about 9 percent a year until about 2030, its oil demand would equal all of today's global crude production, said HSBC chief economist Stephen King.

"So the likelihood is over the next five to ten years, we'll see significantly higher oil prices," King said. "The China story is becoming more and more important." In London, Brent crude was down 23 cents at $76.44 on the ICE Futures exchange.