Oil stays above $79 amid mixed economic signs

KUALA LUMPUR, Malaysia – Oil prices hovered above $79 a barrel Thursday in Asia amid mixed signals over the strength of the global economic recovery.
Benchmark crude for December delivery was down 18 cents to $79.40 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 44 cents to settle at $79.58 on Wednesday.
Prices were underpinned by U.S. data showing lower crude inventories last week and auto club AAA reporting that more drivers are expected on America's highways over the upcoming Thanksgiving weekend, suggesting that consumers are more confident in the economy.
Gains, however, were offset by poor economic news stemming from an unexpected drop in U.S. home construction and disappointing forecasts from technology companies.
"The resistance to oil sustaining above the $80 level is very strong. There are signs of economic recovery but so far, the signals have been mixed and the sustainability of the recovery is uncertain," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.
Crude prices have zigzagged around $79 a barrel for more than a month.
The U.S. Energy Information Administration reported that the country's stockpile of crude oil fell by 900,000 barrels last week. But the drop was hardly a sign of a recovering economy. American petroleum consumption has fallen to the lowest level since July 17, and oil companies are importing much less oil as they scale back their refining operations.
The Commerce Department separately said construction of homes and apartments fell 10.6 percent in October to an annual rate of 529,000 — well below the pace of 600,000 that economists expected.
Despite weak demand from consumers and doubts over the economic recovery, Shum said crude prices are expected to remain within the low $70 and high $80 range.
A weak dollar continued to be a boost for the crude price as investors seeking a dollar hedge and better returns will continue to buy commodities such as oil and gold, he said.
The price of crude, which is traded in the U.S. currency, tend to rise as the dollar falls and investors holding strong international currencies get more buying power.
In other Nymex trading, heating oil fell 0.10 cents to $2.048 a gallon. Gasoline for December delivery was up 0.1 cents to $2.012 a gallon. Natural gas for December delivery fell 0.9 cents to $4.245 per 1,000 cubic feet.
In London, Brent crude for January delivery dropped 6 cents to $79.41 on the ICE Futures

Reid sets markers for historic health care debate

WASHINGTON – Setting up a historic year-end health care debate, Senate Majority Leader Harry Reid unveiled long-awaited legislation Wednesday night to extend coverage to all but 6 percent of eligible Americans and bar private industry from denying insurance because of pre-existing medical conditions.
The Democrat's $849 billion measure is designed to remake the nation's health care system, relying on cuts in future Medicare spending to cover costs — as well as on higher payroll taxes for the well-to-do and a new levy on patients undergoing elective cosmetic surgery.
Aides said the mammoth, 2,074-page bill would reduce deficits by $127 billion over a decade and by as much as $650 billion in the 10 years that follow, citing as-yet-unreleased estimates by the Congressional Budget Office.
"Tonight begins the last leg of this journey," said Nevada Sen. Reid, less than two weeks after the House approved its version of a sweeping remake of the health care system_ and nearly 10 months after President Barack Obama's Inauguration Day summons to action.
Obama welcomed Reid's action, saying, "Today, thanks to the Senate's hard work, we're closer than ever to enacting solutions to these problems. I look forward to working with the Senate and House to get a finished bill to my desk as soon as possible." There was no mention of Obama's longtime goal of signing legislation by year's end.
Republicans vowed a protracted struggle to block the legislation and deny the president a victory that would cap a tumultuous first year in office.
"This bill has been behind closed doors for weeks," said Sen. Mitch McConnell of Kentucky, the Republican leader. "Now, it's America's turn, and this will not be a short debate. Higher premiums, tax increases and Medicare cuts to pay for more government. The American people know that is not reform."
An early showdown on the Senate floor is expected by week's end.
Reid's Senate measure would require most Americans to carry health insurance and would provide hundreds of billions of dollars in subsidies to help those at lower incomes afford it. Medium and large companies would not be required to offer coverage, but they would be forced to pay fees if the government ended up subsidizing their employees' insurance.
Beginning in 2014, the bill would set up new insurance marketplaces — called exchanges — primarily for those who now have a hard time getting or keeping coverage. Consumers would have the choice of purchasing government sold insurance, an attempt to hold down prices charged by private insurers.
After weeks of secretive drafting, Reid outlined the legislation to rank-and-file Democratic senators at a closed-door meeting. "Everyone was positive," said Sen. Amy Klobuchar, D-Minn.
That didn't mean there weren't problems — far from it. At his news conference, Reid pointedly refrained from saying he had the 60 votes necessary to propel the bill over its first hurdle.
Reid met privately earlier in the day with Sens. Ben Nelson of Nebraska, Mary Landrieu of Louisiana and Blanche Lincoln of Arkansas, moderate Democrats who have expressed concerns about the measure.
Nelson later issued a statement strongly suggesting he would vote with fellow Democrats on an initial showdown expected within days. Aides have said privately that Reid decided to retain an existing antitrust exemption for the insurance industry as a way of satisfying the Nebraskan's concerns.
Landrieu said, "I'm not going to be for anything that doesn't drive down costs over time."
Lincoln, the only one of the three who faces re-election next year, told reporters, "We'll wait and see."
With the support of two independents, Democrats have 60 seats, the precise number needed to choke off any delaying tactics by the 40 Republicans who appear united in opposition to the bill in its current form.
In general, Reid proposed an outline that is similar to the House-passed bill, but there were important differences.
He called for an increase of a half percentage point in the Medicare payroll tax for individuals with income over $200,000 a year, $250,000 for couples.
He also included a tax on high-value insurance policies, meant to curb the appetite for expensive care.
The House bill contains neither of those two provisions, relying on an income tax surcharge on the wealthy to finance an expansion of coverage.
Reid's measure also calls for hundreds of billions of dollars in cuts in future Medicare spending, an attempt to satisfy Obama's call to curtail the growth of health care spending that is fiercely opposed by Republicans.
On another controversial issue, Sen. John Kerry, D-Mass., told reporters Reid had decided to require the side-by-side sale of insurance policies that cover abortion services and do not, an attempt to satisfy both sides. That is far less restrictive than a House-passed provision that left liberal Democrats angry.
Ahead lie weeks — if not more — of unpredictable maneuvering on the Senate floor, where Reid and his allies will seek to incorporate changes sought by Democrats and repel attempts by Republicans to defeat the legislation and inflict a significant political defeat on the president.
Reid released his legislation more than a week after the House approved its version of the health care bill on a near party-line vote of 220-215.
According to estimates from the Congressional Budget Office, that House bill, with a price tag of about $1.2 trillion, would result in coverage for tens of millions of uninsured, and provide 96 percent of the eligible population with insurance.
Two Senate committees approved different versions earlier in the year, and while Reid has said he would produce a blend of the two proposals, in fact he had a virtual free hand to come up with a plan that could command the 60 votes needed to pass.
Anticipating a major struggle, the White House deputized Interior Secretary Ken Salazar and former Senate Majority Leader Tom Daschle to join Vice President Joe Biden in trying to clear the way for the bill's approval over the next several weeks.
Salazar, a former Colorado senator, is viewed as a bridge to moderate Democrats who are far outnumbered by liberals inside the Democratic caucus.
Daschle was Obama's first choice for secretary of health and human services, a position from which he was to try and oversee the administration's drive to enact health care legislation. He withdrew his nomination when it was disclosed he had not paid more than $120,000 in federal taxes over several years.

China Commercial Aircraft plans plant in Shanghai

SHANGHAI – Commercial Aircraft Corp. of China plans to build an assembly line for its homegrown C919 jetliners in Shanghai, the latest step in the country's ambitions to become a leader in world aviation.
The company announced the showcase project following a signing ceremony Wednesday with officials of Shanghai's Pudong district, where the plant will be located.
China is counting on the narrow-body, single-aisle C919, China's newest and biggest homegrown commercial jetliner, to compete against Western rivals in the high-stakes international aviation market.
Construction of the factory is to begin soon, with capacity to reach 20 C919s and 50 ARJ 21-series regional jets by 2016, the company, which is also known as COMAC, said in a statement.
Shanghai-based COMAC was set up in 2008 to develop and build passenger aircraft. The company also has research and development facilities in Pudong.
The C919 is due to make its maiden flight by 2014 and to begin deliveries to customers by 2016.
Earlier this week, General Electric's aviation unit teamed up with Aviation Industry Corp. of China, COMAC's state-run parent company, to develop and market electronic systems for commercial aircraft customers, including the C919 narrow-body aircraft.
GE is also supplying engines for the 70 to 110-seat ARJ-21 passenger jet, designed for the local market.
China's huge aviation market has continued to grow quickly, despite the world economic slump. Air passenger traffic rose nearly 20 percent in the first 10 months of the year from the year before, to 191.9 million, according to the country's Civil Aviation Administration.