Oil prices edge up in Asia

SINGAPORE: World oil prices nudged higher in Asian trade on Wednesday but worries about demand were likely to cap the rise, dealers said.

In afternoon trade, New York's main contract, light sweet crude for September delivery, was up 50 cents to USD 113.51 per barrel. It had closed at $113.01 on Tuesday in the US after a drop of $1.44.

Brent North Sea crude for September delivery gained 39 cents to $111.54.

Dealers said fears of supply disruption had receded somewhat after Russia and Georgia agreed to a French-brokered peace plan, following Moscow's decision to halt its military offensive.

The International Energy Agency (IEA) has said the conflict in Georgia threatens a strategic global energy hub.

Energy giant BP said yesterday it had closed an oil pipeline because of the fighting, but that supplies were flowing from the Caspian Sea to the West by other routes.

"Demand destruction is a pretty significant fact in the US and OECD," said Jason Feer, vice president with energy analysts Argus Media. "So I think it looks as though you are starting to see the impact of higher prices" on demand.

The OECD is the Organisation for Economic Cooperation and Development, which groups industrialised nations.

Investors were still waiting to see if demand would fall in developing countries, he added.

Rabobank head of regional research Jan Lambregts said there was more scope for oil price falls in the months ahead as demand weakens.

"The correction in crude oil prices since mid-July has been nothing short of massive, yet in terms of levels it just brought us back to the April-May period so far," said Lambregts.