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Oil prices flat in late morning trade in Asia
Monday, January 14, 2008
SINGAPORE (Thomson Financial) - World oil prices traded flat Tuesday amid tensions in key crude producers Iran and Nigeria that offset concerns that US oil demand could decline amid economic uncertainty.
In late morning trade, New York's main oil futures contract, light sweet crude for delivery in February, fell 1 cent to 94.19 dollars per barrel.
The contract closed up 1.51 dollars at 94.20 dollars per barrel on Monday.
London's Brent North Sea crude for February fell 5 cents to 92.87 dollars a barrel, after settling 1.85 dollars higher at 92.92 dollars on Monday in London.
"The market is more or less steady after gaining yesterday," said Victor Shum, senior principal at Purvin and Gertz international energy consultants in Singapore.
"On one hand, crude oil futures are under pressure due to concerns about the US recession in 2008," Shum said. "But price losses are limited by increasing political tensions in Nigeria and Iran."
US President George W Bush was poised for a second day of talks with close ally King Abdullah of Saudi Arabia on Tuesday, after his administration announced it was taking the first steps in a long-awaited arms deal with the kingdom.
The administration argues the deal is needed to counter Iran and Bush has made clear that what he calls the threat from Iran is top of the agenda during his current Middle East tour.
Iran is the world's fourth-biggest crude oil producer.
"The market found support in Bush's tough talk about Iran," Shum said.
Oil prices also remained at elevated levels above 90 dollars amid ongoing Nigerian rebel attacks on the country's oil industry in the crude-rich Niger Delta region.
Nigeria is Africa's largest crude producer but instability and violence are estimated to have slashed its output by a quarter.
"Violence in Nigeria is on the increase and in the short-term, looks like getting worse," MF Global analyst Robert Laughlin said earlier.
Aside from geopolitics, traders are worried that economic difficulties in the United States -- the world's biggest consumer -- could dent global demand for crude.
The market's focus is now turning to a production meeting of the OPEC oil producers' cartel in Vienna on February 1.
Oil prices have eased since striking record highs above 100 dollars at the start of the year.
Despite pulling back from record levels, prices have continued to win support from a weak dollar, which encourages demand for dollar-priced commodities because they become cheaper for investors using stronger currencies.
Tony Nunan, of Mitsubishi Corp's international petroleum business in Tokyo, said that although oil prices will not return to the 100-dollar level soon they may climb back during the peak North American summer holiday driving season.
