Oil prices down

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IOL image oil rig generic FREE IMAGES An oil rig is shown in this file photo.

Singapore - Oil prices eased in Asian trade Thursday after the US Federal Reserve said it would next month start to scale back its bond-buying programme as the economy shows signs of strengthening.

New York's main contract, West Texas Intermediate (WTI) for January delivery, was down 11 cents at $97.69 in afternoon trade while Brent North Sea crude for February eased 24 cents to $109.39.

The Federal Reserve announced it would cut its stimulus by $10 billion to $75 billion a month from January, indicating it is confident that economic conditions are improving.

Oil prices will “remain in narrow range till there is clear indication about the impact of Fed tapering on the emerging markets”, said Sanjeev Gupta, head of the Asia-Pacific oil and gas practice at consultancy firm EY.

The onset of tapering is likely to send the greenback higher, making dollar-priced oil more expensive to people using other currencies.

The greenback bought 103.88 in mid-morning Asian trade Thursday, slightly down from 104.20 yen late in New York but well up from the levels below 103 yen in Tokyo earlier Wednesday.

“Crude oil investors may expect the effect of declining overseas demand for crude oil to be counter balanced with stronger US domestic demand for the commodity,” Singapore-based Phillip Futures said in a commentary.

US oil prices were given support by a US Energy Information Administration report that said stockpiles in the world's top crude consumer fell 2.9 million barrels in the week to December 13, more than the 2.7 million projected by analysts in a Wall Street Journal survey.

The decline in stockpiles, the third consecutive drop after a 10-week run of rises, came despite oil production in the US remaining at a 25-year high of 8.06 million barrels per day, Phillip Futures said. - Sapa-AFP

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