Oil prices retreat in Asia after overnight surge

Last Updated: Friday, March 2, 2012 - 09:01

Singapore: Oil prices retreated in Asian trade, Friday as dealers took profits from overnight gains driven by rumours of a supply disruption in Saudi Arabia, analysts said.

Oil prices had surged overnight on an Iranian media report about a pipeline fire in Saudi Arabia, but Saudi officials later issued a statement denying the report.

New York's main contract, light sweet crude for delivery in April, shed one cent to USD 108.83 and Brent North Sea crude for April delivery was down 22 cents to USD 125.98 in morning trade.

"The rise in prices overnight was driven by news that there was a fire in Saudi Arabia but that report has now proven to be false and prices have retreated," said Victor Shum, senior principal at Purvin and Gertz global energy consultants in Singapore.

"There is a small level of profit-taking... but the intensifying worries of Iran will continue to keep a high floor on oil prices," he said.

"The market's reaction to the news shows that the oil market is really sensitive to supply disruptions," he added.

Oil-producing Iran is locked in a diplomatic row with major Western powers over its nuclear programme, which the West says is aimed at building an atomic bomb.

Meanwhile, traders were noting positive economic data from the United States and China signalling rising demand in the world's top two oil consumers, analysts said.

The US Labour Department yesterday said claims for US unemployment benefits had fallen to levels last seen in March 2008.

PTI

First Published: Friday, March 2, 2012 - 09:01

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