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Oil prices hover near $90 in Asian trade

Oil prices hover near $90 in Asian trade
AFP
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First Published: Tue, Jan 29 2008. 10 28 AM IST
Updated: Tue, Jan 29 2008. 10 28 AM IST
Singapore: World oil prices were slightly higher Tuesday in Asian trade, hovering near 90 dollars in a market focussed on the fate of the United States economy, dealers said.
In late morning trade, New York’s main oil futures contract, light sweet crude for delivery in March, rose six cents to $91.05 per barrel.
The contract closed up 28 cents at $90.99 a barrel Monday during floor trading on the New York Mercantile Exchange.
Brent North Sea crude for March delivery rose 16 cents to $91.54 a barrel after settling 48 cents higher at $91.38 on Monday in London.
Steve Rowles, an analyst at CFC Seymour securities in Hong Kong, said the market is focussed on the US economy, with dealers awaiting US economic data expected later this week, and the outcome of a two-day Federal Reserve meeting which was to begin Tuesday.
Most analysts expect the Fed, the US central bank, to trim at least another quarter point off its key federal funds interest rate, currently 3.50% after an emergency 0.75 percent cut last week in a move aimed at calming global financial markets roiled by fears of a widening US recession.
Oil prices have recently reacted to gyrations on global equity markets, and are off their early January historic highs of $100.09 for New York’s light sweet crude and $98.50 for Brent.
But oil is still trading at elevated levels thanks to keen demand and limited supplies, traders said.
“Prices remain very well-supported in the high 80s despite huge volatility in financial markets,” Barclays Capital analyst Kevin Norrish said earlier.
“We expect prices to remain vulnerable to further downwards pressure... although with (demand and supply) fundamentals still very tight, the scope for any sustained retreat in prices is very slim in our view.”
Rowles said the “recessionary factors are not strong enough” to restrain upward pressure on the price of oil.
Aside from stock market developments, traders were also awaiting a meeting of the OPEC oil-producing cartel in Vienna, Austria, on Friday.
Analysts expect the Organisation of the Petroleum Exporting Countries (OPEC) to resist calls to increase output to help bring down prices further.
“I don’t see any reason why OPEC would change their output. They will not cut, and they will definitely not increase until they see some clarity over the US economy,” said Rowles.
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First Published: Tue, Jan 29 2008. 10 28 AM IST
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