Oil down in Asian trade

I / Singapore July 13, 2011, 9:46 IST

Oil was down in Asian trade today on fears of faltering energy demand after US crude reserves increased and the eurozone debt crisis showed no signs of abating.

New York's main contract, West Texas Intermediate for delivery in August, fell 41 cents to $97.02 a barrel in morning trade.

Brent North Sea crude for August delivery shed 43 cents to $117.32.

Phillip Futures said investors were concerned that increasing US crude supplies and the escalating debt crisis in the eurozone could hurt energy demand.

The American Petroleum Institute yesterday reported that crude inventories increased 2.3 million barrels last week to 359.4 million, rising "for the first time in six weeks".

Rising crude inventories indicate weaker demand in the United States, the world's biggest oil consumer.

Meanwhile, the eurozone debt crisis, which had sparked international bailouts of Ireland, Greece and Portugal last year, is now touching Italy and Spain.

Yields on Italian and Spanish government debt have surged in recent days, and Ireland's debt rating yesterday was cut to junk, shaking confidence in the eurozone's finances.

Crude prices rebounded yesterday on market rumours that the European Central Bank was buying the bonds of distressed European governments and after the US Federal Reserve indicated that it planned only a gradual easing of its ultra-loose monetary policy.

The OPEC oil cartel has forecast a rise in oil demand into next year, but cautioned that "an unsteady world economy is negatively affecting the oil market and imposing a high range of uncertainty for the short term."