Oil drops below $85 as Asian stocks slump

Oil prices fell below $85 a barrel today as crude traders eyed a sharp drop in Asian stocks.
    
Benchmark crude for May delivery was down 68 cents to $84.83 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 33 cents to settle at $85.51 yesterday.
    
All major Asian stock market indices fell today, led by Japan, China and Hong Kong. China said yesterday it will raise the minimum down payment 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 $80 range since jumping 25% in two months to above $87 last week.
    
"Further price consolidation within about the $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 $2.247 a gallon and gasoline held at $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 $86.25 on the ICE futures exchange.