Oil prices hovered below $109 a barrel Thursday April 7, 2011 in Asia amid concern rising fuel costs could undermine U.S. economic growth and demand for crude.

Benchmark crude for May delivery was down 13 cents at $108.70 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract gained 49 cents to settle at $108.83 on Wednesday April 6, 2011.

In London, Brent crude for May delivery was down 33 cents to $121.97 a barrel on the ICE Futures exchange.

Crude has traded near $108 this week as traders mull the impact of Libya's civil conflict, a weakening U.S. dollar and China's fourth interest rate hike since October.

Investors are also concerned a 29 percent jump in oil prices since mid-February will force consumers to spend more on fuel costs and will eventually undermine crude demand.

Regular unleaded gasoline in the U.S. currently averages $3.69 a gallon, up 23 percent from a year earlier.

"The main worry is that with more of the consumer's budget going toward gas at the pump, it will hold back the nascent recovery," said Anthony Michael Sabino, a professor at St. John's University's business school. "It will put a crimp into spending plans for corporate America, as the costs of energy, transportation, and so forth rise accordingly."

In Asia, subsidies and price controls will help temper the impact of rising crude costs on inflation and consumer spending. However, India, Japan, South Korea, Taiwan and Thailand remain the most vulnerable to higher fuel prices if the crude spike continues, HSBC said in a report.

"The bigger worry for Asia is the damage that high oil prices may do to exports," HSBC said. "If consumers in the West begin to cut back, shipments will slow at a time when local households are already turning more cautious."

In other Nymex trading in May contracts, heating oil fell 0.2 cent to $3.19 a gallon and gasoline dropped 0.6 cent to $3.19 a gallon. Natural gas futures were down 3.4 cents at $4.11 per 1,000 cubic feet.