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Oil dips in Asian trade

Aug 18 2010 11:36 AFP

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Singapore - Oil dipped in Asian trade on Wednesday as investors locked in profits from a price rally overnight and on continued concerns over the global economic rebound.

New York's main contract, light sweet crude for September delivery, was down 24c to $75.52 a barrel in afternoon trade.

Brent North Sea crude for delivery in October tumbled 19c to $76.74.

Prices had jumped on Tuesday to snap five straight days of losses on the back of a weaker dollar and rising equities.

Analysts said investors were taking profits because of concerns over the global economic outlook for the second half of the year, which could impact on energy demand.

"I think the market is still in no-man's land. The market is not confident enough that the global economic recovery has taken hold," said Tony Nunan, a risk manager with Mitsubishi Corp in Tokyo.

He added that crude inventories were high on softer demand.

Prices are likely to be stuck between $70 and $80 "until we get a clearer picture on the economy, especially in the United States", he said.

While US industrial output recovered in July after dropping for the first time in a year, there were still problems in the housing market in the world's biggest economy.

Industrial output rose 1.0% in July from a revised contraction of 0.1% a month earlier, the Federal Reserve said, beating market expectations for a 0.6% jump.

But recent data from the housing market showed the sector was still struggling to emerge from a slump.

Construction of new homes in the US edged up in July but permits issued for future housing construction plunged, the government said. Construction starts on privately owned homes rose by a less-than-expected 1.7%.

DBS Bank said the data confirmed that "housing starts remain just about at rock bottom."

US economic data are closely watched by the oil market because the country is the world's biggest energy consumer.

oil price  |  commodities
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