Singapore: Oil prices were higher in early Asian trade Tuesday after overnight falls in New York on concerns over the United States economy, dealers said.
In morning trading, New York’s main contract, light sweet crude for February delivery gained 52 cents to $95.61 a barrel from $95.09 in late US trades Monday.
Brent North Sea crude for February was up 50 cents at $94.89 a barrel.
Prices had briefly risen in US trading hours after the Pentagon said three US warships had been briefly harassed on Sunday by Iranian speedboats in the Strait of Hormuz, a crucial gateway for global energy supplies.
The Strait of Hormuz is a vital outlet for world energy supplies because crude exports from oil-rich Gulf Arab countries pass through the strait — or about 20-25% of the world’s crude.
“We did see a brief bounce when the Iranian news came out,” said Sucden trader Rob Montefusco.
“They were looking to bash through $100 again but there wasn’t any follow-through buying,” he said.
“The gain in trade reflects expectations that the US inventories report out on Wednesday will show an extended decline in crude oil stocks.
Oil prices struck a record high of $100.09 in intraday trade last Thursday on a combination of declining inventories, a weak dollar, soaring energy demand from Asia and geopolitical risks.
“Prices have edged up a sum, as concerns about the US economy as well as forecasts for warm weather has weighed down crude oil futures markets,” said Victor Shum, senior principal at energy consultancy Purvin and Gertz.
Meanwhile outgoing Opec president, the United Arab Emirates, said Monday the recent rise in prices to $100 had nothing to do with market fundamentals, the WAM state news agency reported.
The gain rather was because of “speculation, investment funds (purchases), regional tensions and other factors unrelated to supply and demand,” it quoted UAE Energy Minister Mohammad bin Dhaen al-Hamli as saying.
“Opec is closely monitoring developments on the oil market,” he said, without indicating what decision might be taken at the cartel’s meeting at its Vienna headquarters next month.