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Oil prices higher in Asia ahead of key US rate decision
SINGAPORE
Petroleumworld.com 12 11 07World oil traded higher in Asia on Tuesday ahead of an expected US interest rate cut that analysts see as boosting economic growth and demand for crude.
In afternoon trade New York's main oil futures contract, light sweet crude for January delivery, was 44 cents higher at 88.30 dollars a barrel after closing at 87.86 dollars in New York on Monday. The contract had traded as high as 89.80 dollars.
Brent North Sea crude for January delivery was 38 cents higher at 88.38 dollars a barrel. The contract reached 89.85 dollars a barrel in London Monday before easing.
"I think we can expect quite a bit of volatility this week," said Victor Shum, of Purvin and Gertz international energy consultants in Singapore.
Concerns about United States economic growth have weighed heavily on crude oil futures but they should receive some support from a key US interest rate decision expected on Tuesday, Shum said.
Most analysts expect the US Federal Reserve to cut its key Fed funds short-term interest rate by a quarter-point to 4.25 percent.
"That will help bolster the US economy," Shum said.
After a run-up to record highs of close to 100 dollars in late November, crude prices have fallen back and analysts say bearish sentiments have taken over.
"I think the bullish froth has been taken out of the crude oil futures market," Shum said.
Underscoring the bearish tendencies was the fact that OPEC's decision last week to leave its daily crude output quota unchanged at 27.25 million barrels failed to spark a rally, Shum said.
Prices initially spiked in reaction to the Organisation of the Petroleum Exporting Countries' (OPEC's) decision but then fell back.
Shum said that as the year draws to a close, many investors are booking profits "to boost their annual returns and hence their year-end bonuses."
Story from AFP 11 0634 GMT 12 07
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