Crude oil prices slip on profit-taking

Crude oil prices eased on profit-taking in thin Asian trade today following gains in New York fuelled by upbeat sentiment over the US Federal Reserve’s decision to begin easing its massive stimulus programme.

New York’s main contract, West Texas Intermediate (WTI) for February delivery, was down 26 cents at USD 98.78 in mid-morning trade while Brent North Sea crude for February eased 30 cents to USD 109.99.

“We are seeing small pullbacks in both the WTI and Brent contracts as they hit resistance levels following overnights gains,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, told AFP.

“The volumes that are being traded right now are about one quarter of what we usually see on a normal day, so investors aren’t likely to be too worried about this short-term dip in thin trading,” he said.

WTI for January rose 97 cents in New York trade yesterday, while Brent climbed 66 cents in London, as investors read the Fed’s decision to cut its monthly asset purchases by $10 billion to $75 billion from January as a sign of its confidence in the economy.

The move was accompanied by a pledge to continue with its ultra-low interest rates even after achieving its goal of bringing unemployment to below 6.5 per cent.

“The commitment from the Fed to keep its key interest rates low had lifted confidence, garnering support for crude oil prices,” Singapore-based Phillip Futures said in a note.

Investors had been concerned that a wind-down of stimulus would hit oil demand outside the United States. The scaling back of the programme sends the greenback higher, and in turn makes dollar-priced oil more expensive to people using other currencies.

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