SINGAPORE: Brent futures slipped back towards $105 a barrel on Tuesday as investors saw the recent surge in prices as an opportunity to book profits, with concerns of an escalation in tensions in the Middle East helping to stem losses.
The benchmark hit its highest in nearly a month above $105 in the previous session as supply worries following Israeli air strikes on Syria trumped concern of weak global demand. Oil also drew support from a record close of the Standard & Poor's 500 Index on hopes of a steady US recovery.
Brent crude slipped 42 cents to $105.04 a barrel by 0455 GMT, after settling up at $105.46, its highest finish since April 10. Brent has rebounded more than $6 a barrel since falling below $99 last Wednesday. US oil fell 70 cents to $95.46, after ending 55 cents higher.
"There is some profit-taking coming in after the sharp rise in prices we saw in the recent days," said Tetsu Emori, a commodities sales manager at Astmax Investments in Tokyo. "The current fundamentals are very weak with China slowing down and with US demand not so strong."
China's crude oil imports last month are expected to have held near to March levels, which were 2.1 percent lower than a year earlier, as some refineries have continued with maintenance programmes amid high fuel stocks. China's preliminary April trade data is due on Wednesday.
Expectations of a further build in US commercial crude stocks after hitting a record high are also weighing on prices.
A preliminary Reuters poll, taken ahead of weekly inventory reports from the American Petroleum Institute (API) and the US Energy Department's Energy Information Administration (EIA), forecast on average that crude stocks increased by 1.8 million barrels in the week ended May 3.
Israel played down weekend air strikes close to Damascus reported to have killed dozens of Syrian soldiers, saying the raids were not aimed at influencing its neighbour's civil war but only at stopping Iranian missiles reaching Lebanese Hezbollah militants.
Brent looks like forming a top around $105.50 per barrel and is due for a deep correction, while US oil is expected to retest support at $94.65, according to Reuters technical analyst Wang Tao.
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