Oil slides in Asian trade

2011-07-13 09:31

Singapore - Oil was down in Asian trade on Wednesday on fears of faltering energy demand after US crude reserves increased while the eurozone debt crisis shows no signs of abating.

New York's main contract, West Texas Intermediate for delivery in August, fell 16 cents to $97.27 a barrel in afternoon trade.

Brent North Sea crude for August delivery shed 39c to $117.36.

The American Petroleum Institute reported on Tuesday that crude inventories increased 2.3 million barrels last week to 359.4 million, a rise "for the first time in six weeks".

Increasing crude inventories indicate weaker demand in the United States, the world's biggest oil consumer.

Meanwhile, the eurozone debt crisis, which has already sparked international bailouts for Ireland, Greece and Portugal, is now threatening to spread to Italy and Spain.

Yields on Italian and Spanish government debt have surged in recent days, and Ireland's debt rating on Tuesday was cut to junk, further shaking confidence in the eurozone's finances.

Crude rebounded Tuesday on rumours that the European Central Bank was buying the bonds of distressed European governments and after the US Federal Reserve indicated it planned only a gradual easing of its ultra-loose monetary policy.

The Opec oil cartel has forecast a rise in oil demand into next year, but cautioned that "an unsteady world economy is negatively affecting the oil market and imposing a high range of uncertainty for the short term".