Crude down in Asia on profit-taking

SINGAPORE  — Crude prices retreated in Asia Friday as traders took profit from an overnight rally sparked by Greek talk of scrapping its debt rescue referendum and the ECB’s interest rate cut, analysts said.

New York’s main contract, light sweet crude for delivery in December, fell 35 cents to $93.72 per barrel.

Brent North Sea crude for December delivery shed 30 cents to $110.53.

Crude markets fell as traders were raking in the fruits of an overnight rally, said Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore.

“We are seeing some profit-taking this morning after the spikes yesterday in oil futures,” he told AFP.

“It shot up quite a bit, the futures reacting to the news that Greece has scrapped its referendum vote and the European Central Bank (ECB) had cut interest rates,” Shum added.

Greek Prime Minister George Papandreou Thursday said he was ready to drop a planned referendum on a eurozone debt rescue package which had infuriated European leaders and caused equities markets to nosedive in the past few days.

Together with the ECB’s unexpected shearing of a key interest rate from 1.50 percent to 1.25 percent to calm the region’s fragile economies, the moves sent equities markets as well as crude and the euro soaring.

But Shum warned that crude markets could fall further as current price levels were not consistent with the economic outlook for the US and Europe.

“For (New York) to be around $94 and Brent above $110 seems too rich given the cool economic prospects in both Europe and the US,” he said.

“Although the Greek government may scrap the referendum vote… the eurozone debt danger is by no means over,” Shum added, pointing to Italy’s persistent yet currently overlooked debt woes as the next danger over the horizon.