Oil higher in Asian trade

Oil higher in Asian trade

Singapore: Oil traded higher in Asia on Friday, 2 November, but was below record peaks of more than $96 as investors took profit and global stock markets weakened on concerns over the US economy, dealers said.

New York’s main futures contract, light sweet crude for delivery in December, was trading at $93.96 a barrel, up 47 cents from its close of $93.49 in US trade Thursday.

Brent North Sea crude for December traded at $90.70, up 98 cents.

The Commonwealth Bank of Australia said in a market note that the fallback in oil prices was influenced by profit-taking and precautionary selling as international equity markets weakened.

Asian stocks suffered heavy losses in early trade Friday after initial euphoria on Wall Street over the US interest rate cut faded quickly as fresh credit jitters rattled global markets.

Indices around the region fell after declines in New York and Europe on renewed worries about the fallout from the mortgage and credit woes that wreaked havoc on world markets in August.

Global stock markets were also spooked after oil rocketed beyond $96 on Thursday.

“It’s before the weekend and people are waiting for fresh news," said Tetsu Emori, a fund manager at Astmax in Tokyo, after oil prices pulled back.

However, the market is still watching whether prices would shoot up to $100.

“People are looking at a higher level, prices are getting more volatile," Emori said.

While he said there could be some resistance against 100-dollar oil, there were just too many factors that could push prices higher.

“The question is how long oil will stay at current levels?" he said. “There are many, many factors — investment money, psychological factors, supplies, geopolitics."

A sharp fall in US crude stocks last week by 3.9 million barrels against forecasts for a gain of 400,000 barrels highlighted supply concerns and helped oil prices spiral.

“At this time of year, we should certainly be substantially building stocks, so to get draws on crude is never good for the refining industry and it shows that the market is decidedly nervous," said Robert Laughlin, a broker at Man Financial.

Oil prices were also boosted by the Federal Reserve’s move Wednesday to reduce US interest rates by a quarter-point to 4.5%. The cut weakened the dollar against other currencies.

A weak US unit encourages oil demand because it makes dollar-priced commodities cheaper for buyers using stronger currencies.