Oil prices below $105 in Asian trade


World oil prices dropped below $105 in Asian trade on Monday amid continuing concerns that energy demand would be affected by a slowing US economy, dealers said.

In afternoon trade, New York's main oil futures contract, light sweet crude for delivery in May, was 81 cents lower at $104.81 per barrel.

The contract closed at $105.62 per barrel during floor trading on Friday at the New York Mercantile Exchange.

Brent North Sea crude for May delivery fell 35 cents to $103.42 a barrel, after settling at $103.77 in London on Friday.

Oil prices fell Friday after the United States Commerce Department reported that the US economy, the world's biggest oil consumer, grew at a tepid 0.6 per cent in the fourth quarter last year.

Jason Feer, vice-president and general manager of energy market analysts Argus Media Ltd, said that because of an economic downturn in the United States, uncertainty clouds demand for oil over the next couple of months.

"The inventories overhang combined with softening demand is the reason for significant drops in pricing," he said in Singapore.

Economic output moderated in the fourth quarter during a widespread housing market downturn and as a related credit squeeze in the US banking system broadened in the final months of last year.

The credit crunch has worsened in recent months and a growing number of economists believe the US economy has now fallen into a recession.

Economic momentum slowed despite the US Federal Reserve's interest rate cuts. Since September, Fed policymakers have slashed the short-term federal funds rate to 2.25 per cent from 5.25 per cent in a bid to shore up growth.

Amid global supply disruptions, New York crude hit a record intraday high of $111.80 on March 17 while London Brent scored a historic peak of $108.02 earlier in March. (AFP)