Oil lower in Asian trade on profit-taking

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SINGAPORE: Oil fell in Asia on profit-taking Thursday following a rally overnight, with persistent concerns over the US and European economies weighing on sentiment, analysts said.

In morning trade, New York's main contract, light sweet crude for November delivery fell 10 cents to $79.58 a barrel and Brent North Sea crude, also for November settlement, eased 38 cents to $102.44.

Analysts said oil prices were down despite a rebound in the equities market as investors sold for profit after posting strong gains in New York.

"The correlation with stocks is not always perfect," said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.

"Given the uncertain prospects for the global economy and eurozone debt issue, it's not unusual for some pullback in oil after making some substantial gains overnight," he told.

Other analysts said the gloomy economic picture in the US and Europe continued to be a drag on the market and had led prices to fall in recent weeks.

"Crude oil benchmarks all weakened over the past week, principally reflecting the increasing lack of confidence in the US and European economies," said Sanjeev Gupta, who heads Ernst and Young's regional oil and gas practice.

Analysts expect the European Central Bank to cut interest rates in an attempt to stave off a recession when it meets later Thursday in the German capital Berlin.

Central bank chiefs from the 17 eurozone countries will gather in the German capital for one of their twice-yearly meetings outside Frankfurt with some economists suggesting it could announce a rate cut.

However, ECB watchers are divided as to the timing of such a move and whether the guardian of the single currency will choose to act as early as Thursday or wait until later in the year. (AFP)