Oil hovers below $92

NEW YORK (AP) — Oil prices hovered below $92 a barrel Thursday after signs of improving U.S. demand and rising interest from financial investors pushed crude to a two–year high.

Benchmark oil for February delivery was down 30 cents to $91.56 a barrel in afternoon trading on the New York Mercantile Exchange. Crude gained 75 cents to settle at $91.86 on Wednesday, the highest settlement price since October 2008.

A report on jobs that showed more people filing for unemployment aid in the U.S. weighed on the dollar Thursday. The euro got a boost after successful bond auctions in Portugal and Italy helped calm some investors worried about Europe's debt crisis.

While the dollar slipped slightly against the euro on Thursday and in turn made crude cheaper for non–dollar investors, experts suggested factors outside the fundamentals of supply and demand could start to hamper oil prices.

"Although the momentum suggests a further rise in prices in the near term, there is still substantial downside potential for prices as soon as sentiment changes on the financial markets," Commerzbank said, while analysts at MF Global in New York listed rate hikes in emerging markets and a stronger dollar among the possible risks.

In other Nymex contracts for February delivery, heating oil was unchanged at $2.6209 a gallon, and gasoline futures were unchanged at $2.4620 per gallon. NaturaL gas prices fell 10 cents to $4.425 per 1,000 cubic feet.

In London, Brent crude fell 27 cents to $97.30 a barrel on the ICE Futures exchange.

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Associated Press (News - Alert) writer Pablo Gorondi in Budapest, Hungary, contributed to this report.