Oil extends losses on profit-taking

SINGAPORE– Oil prices extended losses on profit-taking in Asian trade Friday following sharp gains powered by the US central bank’s pledge to retain its massive bond-buying program, analysts said.

New York’s main contract, West Texas Intermediate (WTI) light sweet crude for delivery in August, eased 14 cents to $104.77 a barrel, while Brent North Sea crude for August delivery shed 20 cents to $107.53.

WTI hit a 15-month high of $107.45 in New York on Thursday and Brent reached $108.93.

“Profit-taking is driving prices down. A lot of investors are taking short positions on oil right now,” Kelly Teoh, market strategist at IG Markets in Singapore, told AFP.

“But I still expect WTI to have strong short-term support at $102 on upbeat sentiment that Fed tapering will take a backseat for now,” she said.

US Federal Reserve chairman Ben Bernanke on Wednesday said its $85 billion-a-month stimulus drive, known as quantitative easing (QE), would be kept in place “for the foreseeable future”.

The news poured cold water on market expectations that the bank would start to wind it down later this year, which has sent global equity indices reeling in recent weeks.

Bernanke insisted that the Fed’s easy-money policy was still necessary, because the unemployment rate at 7.6 percent was still too high and inflation was too low for comfort, despite signs of improvement in the US economy.

The fall in oil prices also comes after nearly two weeks of gains driven by concerns about Middle East supplies owing to an escalation in the Syrian conflict and the military coup in Egypt.