Oil prices were steady near $119 a barrel Wednesday in Asia as investors awaited weekly oil and gasoline inventory data for further evidence of declining crude demand in the U.S. Light, sweet crude for September delivery fell 1 cent to $119.16 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract dropped $2.24 overnight to settle at $119.17 a barrel. Oil will probably drop further unless the U.S. Energy Department's Energy Information Administration says in its weekly oil inventory report that gasoline stocks fell significantly, said Tetsu Emori, who manages a commodity markets fund at ASTMAX Futures Co. in Tokyo.

"If we don't get a strong number, oil prices will likely fall further," he said.

The EIA report on U.S. oil stocks for the week ended Aug. 1 was due out later in the day. The petroleum supply report was expected to show that gasoline stocks fell 1.4 million barrels, according to the average of analysts' estimates in a survey by energy research firm Platts.

The Platts survey also showed that analysts projected crude oil inventories to have fallen 1.2 million barrels during last week.

In London, September Brent crude was up 41 cents at $118.41 a barrel on the ICE Futures exchange.

The U.S. Federal Reserve in an economic assessment statement Tuesday said that along with tight credit and the housing contraction, "elevated energy prices are likely to weigh on economic growth over the next few quarters."

The Fed statement accompanied its decision to keep its key interest rate unchanged at 2 percent. Slower economic growth in the world's largest economy and energy consumer could lead to a significant drop in demand for oil.

"People are looking at the weaker demand," Tetsu said. "I expect prices to fall to between $100 and $110 by the end of the year."

Investors again shrugged off tension over Iran's nuclear program. Iran's response to an incentives package aimed at defusing a dispute over its enrichment of uranium is unacceptable, U.S. officials said Tuesday. Prospects of new sanctions against the country are now more likely.

Nymex front-month crude futures have fallen about $28, or about 19 percent, since reaching a record high of $147.27 on July 11.

In other Nymex trading, heating oil futures rose 0.65 cent to $3.2885 a gallon (3.8 liters) while gasoline prices fell 0.19 cent to $2.9545 a gallon. Natural gas futures decreased 1.6 cents to $8.71 per 1,000 cubic feet.

Written By ALEX KENNEDY

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