Oil prices drops in Asian trade

May 5, 2009

, SINGAPORE, May 5 – Oil prices were lower in Asian trade Tuesday ahead of the weekly energy inventory report in the United States, dealers said.

New York\’s main futures contract, light sweet crude for delivery in June, eased 27 cents to 54.20 dollars a barrel.

Brent North Sea crude for June delivery fell 25 cents to 54.33 dollars.

"Trading is mildly precautionary at the moment… the market is waiting for the weekly inventory data," said Mark Pervan, a senior commodities analyst with ANZ Bank in Melbourne.

The US Department of Energy is due to release its weekly energy report on Wednesday, which provides a snapshot of oil stockpiles in the world\’s largest energy consumer.

World oil prices have slumped since striking record highs above 147 dollars in July 2008, as energy demand weakened due to the global economic downturn.

While prices have bounced back in recent weeks on early signs the worst may be over for the US economy, analysts have cautioned that the current global outbreak of swine flu could set back any recovery.

However, recent data showing that manufacturing in China expanded for the first time in nine months in April should be supportive of oil prices as it means higher demand from the world\’s most populous nation, analysts said.

The CLSA China Purchasing Managers Index, or PMI, a closely watched indicator in the world\’s third-largest economy, rose sharply to 50.1 in April from 44.8 the previous month.

"The oil market is torn between reacting to the threat of the swine flu contracting demand versus the possibility that the economy in China is growing once again," said Phil Flynn of Alaron Trading.


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