Oil prices fall to $78 a barrel in Asian trade
Oil prices dropped on Monday to extend the previous session's decline as traders sold crude contracts to lock in profits.
By Agencies |
SINGAPORE: Oil prices dropped on Monday to extend the previous session's decline as traders sold crude contracts to lock in profits.
Light, sweet crude for October delivery lost 51 cents to $78.59 a barrel in Asian electronic trading on the New York Mercantile Exchange by midmorning in Singapore.
The contract on Friday fell 99 cents to settle at $79.10 a barrel, the first decline in 10 sessions, despite setting a new intraday record of $80.36 a barrel.
Energy investors were watching for the outcome of a meeting of the US Federal Reserve on Tuesday when the central bank's chairman Ben Bernanke and his colleagues will determine their next move on interest rates, analysts said.
The Fed is expected to lower interest rates the first time in four years to prevent a housing meltdown and keep tightening credit from driving the economy into a recession.
``The expectation is that the US Federal Reserve will cut interest rates, and that's a signal to the market that the Fed will do what it can to help bolster the US economy,'' said Victor Shum of Purvin & Gertz in Singapore. ``What that means is the US economy will be less likely go into a recession and that will be supportive of pricing.''
Some energy investors had been worried that credit tightness resulting from problems in the US mortgage industry is spreading to other sectors, which could curb demand for oil and gasoline. Over the short term, a rate cut would provide an important psychological boost. It could make investors, businesses and others less inclined to clamp down or make drastic changes in their behavior that would hurt the economy.
Shum said crude futures were declining Monday on profit-taking and the reduced threat of tropical storms on key oil and gas infrastructure in the Gulf of Mexico.
Oil's rapid rise from $69 a barrel less than a month ago has been propelled by falling US oil inventories, concerns about growing demand and speculative buying by large investment funds. Several analysts are now sounding alarms, arguing that there are no fundamental reasons supporting oil's rally.
In London, October Brent crude fell 24 cents to $75.98 a barrel on the ICE futures exchange.
Heating oil futures lost 0.68 cent to $2.201 a gallon (3.8 liters) while gasoline futures fell 1.04 cents to $2.026 a gallon. Natural gas rose 2.1 cents to $6.3 per 1,000 cubic feet.
Light, sweet crude for October delivery lost 51 cents to $78.59 a barrel in Asian electronic trading on the New York Mercantile Exchange by midmorning in Singapore.
The contract on Friday fell 99 cents to settle at $79.10 a barrel, the first decline in 10 sessions, despite setting a new intraday record of $80.36 a barrel.
Energy investors were watching for the outcome of a meeting of the US Federal Reserve on Tuesday when the central bank's chairman Ben Bernanke and his colleagues will determine their next move on interest rates, analysts said.
The Fed is expected to lower interest rates the first time in four years to prevent a housing meltdown and keep tightening credit from driving the economy into a recession.
``The expectation is that the US Federal Reserve will cut interest rates, and that's a signal to the market that the Fed will do what it can to help bolster the US economy,'' said Victor Shum of Purvin & Gertz in Singapore. ``What that means is the US economy will be less likely go into a recession and that will be supportive of pricing.''
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Some energy investors had been worried that credit tightness resulting from problems in the US mortgage industry is spreading to other sectors, which could curb demand for oil and gasoline. Over the short term, a rate cut would provide an important psychological boost. It could make investors, businesses and others less inclined to clamp down or make drastic changes in their behavior that would hurt the economy.
Shum said crude futures were declining Monday on profit-taking and the reduced threat of tropical storms on key oil and gas infrastructure in the Gulf of Mexico.
Oil's rapid rise from $69 a barrel less than a month ago has been propelled by falling US oil inventories, concerns about growing demand and speculative buying by large investment funds. Several analysts are now sounding alarms, arguing that there are no fundamental reasons supporting oil's rally.
In London, October Brent crude fell 24 cents to $75.98 a barrel on the ICE futures exchange.
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Heating oil futures lost 0.68 cent to $2.201 a gallon (3.8 liters) while gasoline futures fell 1.04 cents to $2.026 a gallon. Natural gas rose 2.1 cents to $6.3 per 1,000 cubic feet.
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