SINGAPORE, Nov 20 – Oil rose in Asian trade Friday as investors bought the commodity at more attractive prices, but concern over the strength of the global economic recovery has injected caution into the market.
New York\’s main contract, light sweet crude for December delivery, was up 28 cents to 77.74 dollars a barrel in afternoon trade after slumping 2.12 dollars in US trade overnight.
Brent North Sea crude for January rose 45 cents to 78.09 dollars, after dipping 1.83 dollars in London trade.
"The reason that oil is up is probably due to the fact that many investors view pricing below 78 dollars a barrel as a buying opportunity," said Victor Shum, senior principal at energy consultancy Purvin and Gertz in Singapore.
"The oil market has shown resistance against breaking through the 80-dollar level simply because the sustainability of economic recovery is still uncertain and oil fundamentals are weak."
New York crude on Wednesday breached 80 dollars a barrel after government data showed reserves in the United States — the world\’s biggest energy consuming nation — fell 900,000 barrels in the week ending November 13.
The decline was more than the 600,000 barrels anticipated by the market.
US gasoline or petrol inventories tumbled 1.7 million barrels, confounding expectations for a small gain.
Stockpiles of distillates, which include diesel and heating fuel, fell 300,000 barrels. Analysts had pencilled in a bigger drop of 500,000 barrels.
But pricing failed to hold at 80 dollars following data showing a persistent high level of unemployment in the United States, where consumers are major buyers of the world\’s exports and are key to any rebound from the global slump.
Oil prices are expected to continue trading in a tight range, and with only six more weeks to go before the year ends, "some market participants may want to lock in profits this year," Shum said.
"Oil demand remains very fragile and so that\’s going to cap any substantial gains in prices," he added.