Oil mixed in Asian trade

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SINGAPORE: Oil was mixed in Asian trade Thursday as a larger-than-expected fall in crude stockpiles underscored strong energy demand in the United States, the world's biggest economy.

Trading was volatile and price gains were being limited by concerns over the debt crisis in the eurozone, analysts said.

New York's main contract, West Texas Intermediate for delivery in August, was up seven cents to $98.12 a barrel in afternoon trade.

Brent North Sea crude for August delivery eased 30 cents to $118.48.

"The US oil inventories report showed a larger-than-expected stock drawdown for the sixth consecutive week," said Victor Shum, an analyst with Purvin and Gertz energy consultancy in Singapore.

He said this indicated that "US oil demand remains quite strong despite the high unemployment situation".

The US Department of Energy reported that crude inventories dropped by 3.1 million barrels last week, more than double the amount expected by analysts.

Additionally, petrol inventories fell by 800,000 barrels, reflecting heavy usage over the July 4 Independence Day weekend, one of the busiest periods of the US summer driving season.

US energy consumption is being closely monitored by the market because it is the world's biggest economy and oil consumer.

Meanwhile, the Paris-based International Energy Agency warned that the oil market needed more supplies for the third quarter of 2011, despite increased OPEC production and its own emergency stock release last month.

"We welcome rising OPEC volumes seen in June, but the market needs still more oil," the IEA said in a monthly report, describing global oil demand as "robust".

On June 23, the IEA authorised an emergency drawdown of its member nations' strategic oil stockpiles to replace lost output from Libya and to give the global economy relief from soaring energy prices.

Oil prices have rebounded since then and are now above the levels they were at prior to the IEA's announcement, but the European debt crisis is dampening sentiment.

"The European debt crisis concerns remains one factor limiting further gains in oil futures," Shum said. (AFP)