Asian oil prices relax amid support by cuts

Asian oil prices relax amid support by cuts

SINGAPORE (Reuters): Crude oil prices in Asia on Tuesday eased on speculative selling, but stayed within sight of 22-month highs as producer output cuts provided fundamental support.

September U.S. light crude futures on the electronic New York Mercantile Exchange (NYMEX) ACCESS system in Asia last traded at US$21.35 per barrel, lower by one cent from the close in New York.

In regular NYMEX trade on Monday, the contract settled 31 cents down at $21.36, as speculators sold to take advantage of the current price strength.

The October Brent crude contract on the Singapore International Monetary Exchange (SIMEX) was bid at $20.35 per barrel, after it settled seven cents weaker at $20.43 on London's International Monetary Exchange (IPE).

"We seeing that prices had to eventually come off. Last week we saw a continued rise, so things should take a little breather now," said Mark Ammirati of broker E.D.&F Man in New York.

On Friday, Brent prices rose to an almost two-year high of $21 per barrel, while NYMEX crude settled at a 22-month high of $21.67, giving rise to expectations that the market was ripe for profit taking.

Brent has exceeded the $18-$20 price level that the Organization of Petroleum Exporting Countries (OPEC) had targeted when they agreed in March to reduce production.

Traders said despite the recent sell-off, speculators were still holding relatively long positions in the market, and may be looking to cash in gains.

"I think there are still a lot of people who are long this market, people haven't really liquidated all their long positions," said Ammirati.

But prices were being kept from sliding by signs that OPEC was complying closely to its output cut pledges made in March.

The market was watching for the next oil industry data for the United States, the world's largest oil consumer, to determine a clearer price direction.