Oil below $78 on profit-taking, weaker stocks

SINGAPORE: Oil prices eased in Asian trade on Thursday as stock markets weakened and investors booked profits following a surge above $78 a barrel, analysts said.

New York's main futures contract, light sweet crude for delivery in July, shed 60 cents to $77.07 a barrel while London's Brent North Sea crude for August delivery was off 24 cents at $77.90.

"Oil prices have eased a bit and this is consistent with the movement in equities," said Victor Shum, a senior principal with the Purvin and Gertz energy consultancy.

"It's not surprising that we are seeing declines at the same time that we are seeing some easing in the Japanese Nikkei stock index," he said.

Tokyo shares slipped 0.67 per cent Thursday on profit taking after the previous day's gains, amid an absence of strong cues, dealers said.

Shum said investors were also cashing in after oil prices rose for the third day running Wednesday, with the New York contract reaching an intra-day peak of $78.13, its highest price since May 10.

"Oil pricing has been rallying for the past couple of days in line with the rally in equities and after these gains, investors are inclined to book some profits," Shum said.

Prices had gained support from a surprise drop in US gasoline inventories, which stoked hopes for rising summer demand in the world's biggest energy-consuming nation.