Oil prices ease in Asia after hitting US$100

SINGAPORE: World oil prices eased in Asian trading yesterday after earlier sending a shudder through the global economy by hitting a record US$100 (K293.68) per barrel for the first time, dealers said.
New York’s main contract, light sweet crude for February delivery, briefly touched US$100 in US trading on Wednesday but was at US$99.30 (K291.63) in afternoon Asian trade.
The contract was A$0.32 lower in Asia against its record close of US$99.62 (K292.57) in New York on Wednesday, the first trading day of the year, when it rose US$3.64 (K10.69).
Brent North Sea crude for February was A$0.43 lower in Asia at US$97.41 (K286.08). It had soared US$3.99 (K11.72) per barrel in London on Wednesday to settle at a record US$97.84 (K287.34), hitting an intra-day high of US$98 (K287.81) along the way.
Analysts said rising oil prices could push up inflation at a time when an expected US economic slowdown may hamper the global economy.
“It’s going to have a huge impact on overall global inflation,” Steve Rowles, a commodities strategist with CFC Seymour securities in Hong Kong, said.
Share prices in the US and Asia have already skidded after the rise to US$100 and on fears for the US economy after it released weak manufacturing growth data.
Rowles said violence in Nigeria, Africa’s biggest oil producer, appeared to be the immediate catalyst for the spike to the psychologically key US$100-level.
At least 12 people were killed over the New Year holiday period in Nigeria’s oil capital Port Harcourt, stoking fears crude output could be further reduced. Violence has cut Nigeria’s oil output by about a fifth since the start of 2006.
But Rowles said the main issue remained geopolitical tension, in part after the assassination of Pakistani opposition leader Benazir Bhutto. He added the direction of prices would become clearer after the New Year holiday period.
Phil Flynn, an analyst at Alaron Trading, said several factors were supporting crude prices. – AFP