Singapore: World oil prices nudged higher in Asian trade Wednesday but worries about demand were likely to cap the rise, dealers said.
In afternoon trade, New York’s main contract, light sweet crude for September delivery, was up 10 cents to $113.11 per barrel. It had closed at $113.01 Tuesday in the US after a drop of $1.44.
Brent North Sea crude for September delivery gained 40 cents to $111.55.
Dealers said fears of supply disruption receded somewhat after Russian President Dmitry Medvedev ordered a halt to his country’s military offensive against Georgia.
The International Energy Agency (IEA) has said the conflict in Georgia threatens a strategic global energy hub.
Energy giant BP said Tuesday it had closed an oil pipeline because of the fighting, but that energy supplies were flowing from the Caspian Sea to the West by other routes.
“Demand destruction is a pretty significant fact in the US and OECD. I think it looks as though you are starting to see the impact of higher prices on demand,” said Jason Feer, vice president with energy analysts Argus Media.
The OECD is the Organisation for Economic Cooperation and Development, which groups industralised nations. “Investors were still waiting to see if demand would fall in developing countries,” he added.
Rabobank head of regional research Jan Lambregts said there was more scope for oil price falls in the months ahead as demand weakened.
“The correction in crude oil prices since mid-July has been nothing short of massive, yet in terms of levels it just brought us back to the April-May period so far,” said Lambregts.
“On a six-month horizon the outlook for crude oil prices therefore remains negative, as even after a correction of more than $30 plenty of air appears to remain at the current level,” he said.
Crude oil prices have plummeted since hitting record highs above $147 a month ago as the market frets about weakening demand due to the slowing global economy.
The IEA on Tuesday forecast a steep drop in demand in advanced countries because of high prices and cooling economies.