Oil hangs near $70 in Asia after big tumble

       Oil prices hung near $70 a barrel yesterday in Asia after falling steeply overnight amid news that China's crude consumption fell in August.
       Benchmark crude for October delivery was up 59 cents at $70.30 a barrel by late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell $2.33 to settle at $69.71 on Monday.
       Energy consumption in No rth America and Europe has been crimped by recession, leaving China as one of the few countries that continue to consume oil, gasoline and diesel in growing quantities. That pace, at least during late summer, appeared to slow,according to a report released Monday.
       Chinese oil demand slid 5.4% in August from July, the first monthto-month drop since March, according to Platts, the energy information arm of McGraw-Hill Cos, as the world's second-largest oil consumer reined in oil imports and crude throughput rates at its domestic refineries.
       But some analysts expect a secondhalf recovery in demand from Europe and the US combined with still decent energy appetite from Asia to boost oil prices.
       "I think we're going to see a pretty significant recovery in the second half in the US and Eur ope, and demand from China has been holding up,' said Christoffer Moltke-Leth, head of sales trading for Saxo Capital Markets in Singapore. "I see more upside than downside for oil prices right now."
       Moltke-Leth said crude could r ise above $75 during the next month. "If we can break through that, prices will likely jump to $80."
       In other Nymex trading, gasoline for October delivery rose 1.61 cents to $1.7675 a gallon, and heating oil rose 2.12 cents to $1.7729 a gallon. Natural gas,after tumbling more than 5 percent, was up 10.5 cents to $3.681 per 1,000 cubic feet.
       In London, Brent crude rose 62 cents to $69.33 on the ICE Futures exchange.
       "Oil has continued to take its cue from the value of the US dollar,' said Victor Shum, senior principal at Purvin and Gertz energy consultancy in Singapore.
       "The dollar has weakened against the euro and also the yen and that has provided some support to oil."
       Since oil is traded in the US currency,a weaker dollar makes the commodity more attractive to holders of stronger units, leading to greater demand and pushing prices higher.
       Shum said investors are waiting for the results of the Fed meeting yesterday and today, with keen interest on any indications US interest rates will be raised as the economy stabilises.