Oil prices ease in Asian markets

Oil prices ease in Asian markets

SINGAPORE (Reuters): Oil prices slipped in Asia amid profit-
taking on Tuesday after surging to nine-year highs in London and
New York, traders said.

January New York Mercantile Exchange (NYMEX) crude futures
were at US$26.83 by 0804 GMT, down 24 cents from the New York
close on Monday, where the contract had ended at $27.07.

U.S. crude prices last rose above $27 per barrel during the
Iraq crisis in January 1991, when allied forces were preparing to
eject troops from Kuwait.

Brent crude futures had also soared on the London
International Petroleum Exchange on Monday, with the January
contract ending the day 71 cents higher at $25.78.

Prices had rocketed to a fresh nine-year high of $25.90 in
early London trade, but eased slightly by the end of the day.

On the Singapore International Monetary Exchange, Brent crude
was untraded.

The price surge was mainly in response to Iraq's move on
Monday to halt oil loadings after Baghdad over the weekend
rejected a UN proposal to extend its "oil-for-food" deal for two
weeks.

Iraq said the extension was orchestrated by the United States
to blackmail other Security Council members to accept a draft
solution on weapons inspections.

The Iraqi move comes at a time when global oil stocks are
running low as the northern hemisphere moves into peak winter
demand season.

Despite the declining inventories, producers seemed committed
to their decision to maintain output cuts until March 2000, as
originally agreed.

OPEC president Abdullah bin Hamad, who is also Qatar's
minister of energy and industry, said at the weekend that some
producers wanted to extend the supply curbs to end June or even
end-2000.

Current crude prices are a far cry from the historical lows at
the start of the year, when Brent fell to sub-$10 levels. But
producers have said they were more concerned about the level of
global inventories rather than the current price levels.

Some analysts have said that stocks could fall below 1996
levels by December if OPEC maintains its production restraint.
Stocks in 1996 have been identified by some producers as their
ideal inventory level.