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Oil prices mixed in Asian trade

Oil prices were mixed in Asia on Thursday as traders took profits from gains fuelled by a bigger-than-expected drop in US crude inventories, analysts said.

New York’s main contract, West Texas Intermediate (WTI) light sweet crude for delivery in August, was up 27 cents to $106.79 a barrel in afternoon trade after a dip earlier in the day. Brent North Sea crude for August delivery was down 13 cents at $108.38.

WTI crude surged $2.99 in New York Wednesday after the US Energy Information Administration’s (EIA) weekly crude stockpiles data indicated a pickup in demand in the world’s biggest economy.

Brent rose 70 cents in London trade Wednesday.

“Traders have paused to take stock following the huge overnight gains over the EIA data,” David Lennox, resource analyst at Fat Prophets in Sydney, said.

“This is prime US driving season, and the inventory drawdown indicates a healthy pickup in demand,” he said.

The EIA data released Wednesday showed US crude stockpiles tumbled 9.9 million barrels in the week ended July 5.

That was more than triple the 2.9 million barrel drop expected by most analysts polled by Dow Jones Newswires, and followed the prior week’s drop of nearly 10 million barrels.

Despite the sell-off in Asian trading hours, analysts said oil prices were being supported by Federal Reserve chairman Ben Bernanke’s comments that its economic stimulus measures were still necessary.

“There is an upbeat sentiment from his comments that the US Fed will continue to pursue an accommodative monetary policy,” said Desmond Chua, market analyst at CMC Markets in Singapore.

Robust US economic data have led some analysts to believe that the Fed would begin winding down its $85 billion-a-month bond buying scheme earlier than expected.