Oil prices scale up in Asian trade

Singapore – Oil prices climbed in Asian trade on Monday as disappointing US housing data tempered expectations of stimulus tapering by the Federal Reserve.

 

New York's main contract, West Texas Intermediate for delivery in October, rose 36 cents to $106.78 in mid-morning trade, and Brent North Sea crude for October added nine cents to $111.13.

 

US housing data released on Friday put July new-home sales at an annual pace of 394 000, down from June's revised 455 000.

 

June's number was originally reported at a five-year high of 497 000, which fuelled confidence that home-buyers were shrugging off higher mortgage rates.

 

“There are indications that higher rates in the recent two or three months may already be dampening the housing market,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.

 

The Fed's policy-setting Federal Open Market Committee had earlier signalled it would begin to taper its $85-billion-a-month bond-buying programme, starting as early as September if the economy continued to improve broadly.

 

“In the light of the home sales data, there might be concern from the Fed to wait a little while,” said Spooner.

 

Instability in the Middle East also continued to support oil prices amid the political crisis in Egypt and allegations that Syrian forces used chemical weapons on civilians.

 

“Traders are working an increased risk premium into prices with the events in Syria and Egypt,” said Spooner.

 

Source: AFP, IOL