Oil down in Asia on profit-taking

A woman waits beside a taxi fuelling up at a Sinopec gas station in Beijing. AFP FILE PHOTO

SINGAPORE— Oil prices eased in Asian trading hours Monday as investors took profits following last week’s rally triggered by concerns over rising tensions in the Middle East, analysts said.

New York’s main contract, light sweet crude for delivery in July, dropped 19 cents to $97.66 a barrel while Brent North Sea crude for August delivery shed 10 cents to $105.83 in morning trade.

“Markets are close to a resistance level after last week’s surge, and the feeling is that the major impulse this week will be downwards,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, told AFP.

“The downside impulse could be sparked from a further build-up in US crude inventories or poor US and Japanese economic data”.

Uncertainty over whether the US Federal Reserve will continue its monetary stimulus programme is also weighing on prices, McCarthy said.

The Federal Open Market Committee, which sets the benchmark US dollar interest rate, meets on Tuesday and Wednesday and investors are expecting greater clarity on whether it will hold down long-term rates with its $85 billion-a-month bond buying program.

Meanwhile, investors are continuing to keep a close watch on the Middle East.

Prices had surged in late trading on Friday after US officials said they had evidence of the use of chemical weapons by forces backing Syrian leader Bashar al-Assad and signalled that Washington could begin arming the opposition.

“The fear of a contagion of conflict and a consequent supply shock in the Middle East region remains in the background even as traders are looking at the other factors,” said David Lennox, resource analyst at Fat Prophets in Sydney.

Russian President Vladimir Putin, speaking on the eve of a G8 summit in Northern Ireland, warned on Sunday against arming Syrian rebels and insisted that Moscow had abided by “rules and norms” when providing weapons to the Syrian regime.