Oil prices turned lower in Asia on Thursday, as traders cashed in on gains following an overnight rally driven by strong energy demand in the United States.
New York’s main contract, West Texas Intermediate for September, was down nine cents to $94.24 a barrel in the afternoon and Brent North Sea crude for September dropped five cents to $116.20.
Prices climbed sharply in New York after the US Energy Information Administration (EIA) said crude inventories plunged 3.7 million barrels in the week to August 10, far heavier than the market had expected.
Falling inventories indicate stronger demand in the world’s biggest economy.
Analysts said prices were being supported by geopolitical tensions amid fighting in Syria, in the crude-rich Middle East, and major oil producer Iran’s standoff with Western powers over its controversial nuclear programme.
“The path of least resistance still remains to the upside, in our view, but there appear to be a number of funds looking for a further cycle downwards in Q3 (third quarter),” British bank Barclays said in a market commentary.
With Brent oil having risen around $25 over the past seven weeks, “we detect an increasing interest from unhedged money funds to fade the rally”, it said.
However, it added that this is “being held back by the recent renewed market sensitivity to geopolitical headlines”.
