Oil extends gains in Asian trade

I / Singapore August 16, 2012, 9:57 IST

Oil prices rose in Asian trade today, extending a rally driven by strong energy demand in the United States.

New York's main contract, West Texas Intermediate for September, was up 10 cents to $94.43 a barrel in the morning, and Brent North Sea crude for September jumped 30 cents to $116.55.

Prices climbed sharply in New York after the US Energy Information Administration (EIA) said crude inventories plunged 3.7 million barrels in the week to August 10, far heaver than the market had expected.

Falling inventories indicate stronger demand in the world's biggest economy.

"Oil prices soared as US stockpiles fell sharply and demand hit its highest level in nine months," said Justin Harper, an analyst with IG Markets Singapore said.

Phillip Futures said "fears of supply disruptions as Middle East tensions festered, as well as hope for further stimulus from major central banks to support the weakening global economy, added lift to oil futures".

The EIA added that gasoline or petrol inventories slid 2.4 million barrels. Analysts had pencilled in a drop of 1.7 million.

However, distillates -- which include diesel and heating fuel -- increased 700,000 barrels, compared with estimates for a 500,000-barrel decline.

Some analysts think oil is overbought but selling is being held back by geopolitical tensions sparked by fighting in Syria and oil-producing Iran's standoff with Western powers over its controversial nuclear programme.