Crude down in Asia on profit-taking

Oil rigs extract petroleum in Culver City, California. AFP FILE PHOTO

Singapore – Crude slid in Asia on Wednesday with traders taking profit from overnight gains as euphoria over a speculated US Federal Reserve stimulus offset persistent worries about Europe, analysts said.

New York’s main contract, light sweet crude for delivery in July, fell 19 cents to $83.84 a barrel on its last trading day and Brent North Sea crude for August delivery shed 13 cents to $95.63.

Oil traders were cashing out of the market after a rally in late trade Tuesday fuelled by talk of Fed action to boost the flagging US economy, said Jason Hughes, head of premium client management for IG Markets Singapore.

“We’ve seen the oil price ease a bit in the Asian session so far, perhaps that’s in line with the view that people might be taking some short-term gains,” he told AFP.

The Federal Reserve on Tuesday began another crunch policy meeting under the pall of subpar US jobs growth and a European debt crisis that could slowly squeeze the life out of the global recovery.

Many on Wall Street were betting that the bad news forces the Fed to come to the rescue – altering its bond portfolio or piling more assets on its already considerably swollen balance sheet.

But Hughes said traders were taking a second look at their expectations of drastic Fed action to jumpstart the economy of the world’s largest oil consumer after the initial euphoria.

“There is mixed opinion in the market on what kind of easing might come about… and given little or no action (from the Fed) we’ll probably see quite a negative response” from crude markets, he said.

On the European front, traders were also sceptical of a G20 statement issued Tuesday vowing that eurozone members will “take all necessary measures” to stabilise the debt-riddled single currency bloc, Hughes said.

“The view that Europe will come out all guns blazing is a little optimistic,” he added.