Oil prices turn lower in Asian trade

July 24, 2014 - 9:59:22 am

SINGAPORE: Oil prices turned lower in Asia Thursday as investors took a breather from gains that came after the United States reported a large decline in its crude inventories, indicating strong demand.

US benchmark West Texas Intermediate for delivery in September was down 24 cents at $102.88 a barrel in afternoon trade and Brent crude tumbled 13 cents to $109.90.

Despite the dip, analysts said prices are likely to remain high because of data showing strong demand in the United States, the world's biggest oil consuming nation.

The US Energy Information Administration said inventories fell four million barrels in the week ending July 18, the fourth weekly decline in a row and far bigger than the 2.5 million-barrel drop forecast by analysts.

The report also showed stocks at Cushing, Oklahoma, the biggest oil storage hub in the US, dropped 1.5 million barrels.

A fall in the inventories is typically a sign of stronger demand and is positive news for prices.

The US is currently in its summer driving season when Americans take to the road for their holidays, lifting demand for petrol.

"WTI price received support from the Energy Information Administration report, which revealed that the inventory of crude fell more than what was forecasted," said Sanjeev Gupta, head of the Asia-Pacific Oil & Gas practice at professional services firm EY.

With concerns over the fallout from the downing of a Malaysian airliner in Ukraine easing, traders are keeping an eye over the Israeli ground and air assault against Hamas militants in Gaza as well as fighting in North African oil producer Libya.

The General National Congress, which has governed violence-wracked Libya since dictator Moamer Kadhafi's overthrow, said Wednesday it will hand over legislative power to a newly elected parliament on August 4.

But hopes that the announcement would signal an end to fighting among rival factions were dashed as a more than week-long battle intensified for control of Tripoli airport. (AFP)