Crude oil prices ease in Asia after US Fed decision

SINGAPORE: Crude oil prices fell back below 90 dollars in Asia on Wednesday after an initial spike that followed a key US interest rate cut.

In morning trade, New York's main contract, light sweet crude for January delivery, was 52 cents lower at 89.50 dollars.

The contract jumped 2.16 dollars to close at 90.02 dollars per barrel in New York trades on Tuesday.

Brent North Sea crude for January delivery was 44 cents lower at 89.55 dollars a barrel after climbing 1.95 dollars in London on Tuesday.

Oil pushed higher as the United States Federal Open Market Committee (FOMC) met on Tuesday but eased after the central bank cut its main rate by a quarter percentage point, avoiding a more aggressive half-point reduction expected by some.

The move failed to allay concerns on financial markets that the US economy runs a risk of entering a serious downturn, analysts said.

Concerns about economic growth in the United States, the world's biggest energy consumer, have weighed heavily on oil prices in recent weeks.

After a run-up to record highs of close to 100 dollars in late November, prices have fallen back on concerns a sharp slowdown in the United States could dampen demand.

"I think people don't want to buy over 90," said Tetsu Emori, a fund manager with Astmax asset managers in Tokyo. He said small-time speculators had lost large amounts of money after the recent run-up in oil prices.

Emori discounted the influence of the Fed rate cut on crude prices given that the US dollar has strengthened recently.

A stronger dollar discourages demand for dollar-priced goods, such as crude oil, for buyers using weaker currencies.

"The major divide is the cleft between those concerned with tight supply as core winter heating demand approaches and worries over slumping energy demand growth as a consequence of a contracting global economy," John Kilduff, at MF Global, said during US trading hours.

Many market players now believe prices will be largely range-bound until the end of the year.