Oil eased in Asian trade yesterday from closing record highs ahead of a crucial US-Turkey meeting aimed at resolving a crisis over Kurdish rebels in northern Iraq, dealers said.
New York's main contract, light sweet crude for December delivery, was off US$0.95 at US$94.98 a barrel from its closing record high of US$95.93 in US trade on Friday.
Brent North Sea crude for December delivery dropped US$0.59 to US$91.49.
"Today we will continue to see a decline when New York opens later," said Steve Rowles, an analyst with CFC Seymour in Hong Kong.
"The fact that we have the Kurdish talks today is a major event ... it's a good time to take profit," he said, referring to the meeting between Turkish Prime Minister Recep Tayyip Erdogan and US President George W. Bush yesterday in Washington.
"This current rally from the high US$70s started with the Turkish-Iraq situation," said Dariusz Kowalczyk, chief investment strategist at CFC Seymour Ltd in Hong Kong. "So a 1 percent decline on this news is legitimate."
FEARS
Tensions between Turkey and Kurdish rebels were a major driver behind the spike in oil prices as traders were concerned supplies from the oil-rich Middle East will be disrupted if the crisis spills over into the region.
Analysts say oil prices remain under pressure to rise further.
"The emerging political crisis in Pakistan, where President [Pervez] Musharraf has declared emergency rule, may add to oil market concerns about instability in the Middle East," the Commonwealth Bank of Australia said in a note.
"As well, some weather forecasters were expecting colder weather in the US North-East in the coming week, which might add to the demand for heating oil," the bank said.
US INVENTORIES
US heating oil inventories have climbed for the past two weeks, narrowing the difference from last year's level and easing concern that supplies may be inadequate before the Northern Hemisphere winter, said Hirofumi Kawachi, a senior energy analyst at Mizuho Securities Ltd in Tokyo.
Mexico, the third-largest oil supplier to the US, said it resumed full oil output from wells in the Gulf of Mexico after a five-day disruption caused by a storm, state-owned Petroleos Mexicanos said on Friday.
Production had fallen by as much as 1.1 million barrels a day.
"Apart from the geopolitical risks there are few things to take the oil price higher," Kawachi said.
Oil may rise this week on speculation that OPEC won't increase production as fast as consumption rises in the Northern Hemisphere this winter, a Bloomberg News survey found.
Twenty-one of 35 analysts surveyed, or 60 percent, said oil prices will rise through Friday, the first bullish response since July 6.
OPEC pledged in September to raise output starting this month to reduce prices. Global oil use peaks in the fourth quarter, when refiners make heating fuel for the Northern Hemisphere winter.
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