Oil prices higher in Asian trade

SINGAPORE: Oil prices were higher in Asian trade Thursday, supported by news that the International Monetary Fund seeking to boost its coffers to aid in crisis intervention, analysts said.

Data showing a drop in US crude inventories also helped bolster the market even after the International Energy Agency (IEA) slashed its estimate for global demand growth in 2012.

New York's main contract, West Texas Intermediate crude for delivery in February, gained 72 cents to $101.31 a barrel in the afternoon.

Brent North Sea crude for March delivery was up 74 cents to $111.40.

"News that the IMF is increasing its firepower to aid the situation in crisis-hit Europe... is affecting market sentiment to push prices up," said Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore.

The IMF on Wednesday said it intended to raise $500 billion in extra cash to increase its ability to help countries in financial trouble.

With several European nations veering on recession and Greece on the brink of default, the IMF said it lacks the resources to be the world's lender of last resort.

The lender said the $500 billion includes a recent European commitment to add about $200 billion to its resources.

"Higher prices are also supported by advanced data from API showing a decline in US crude inventories," said Shum, referring to the industry group American Petroleum Institute.

Advanced API figures showed that crude inventories in the world's top oil consumer had declined 4.81 million barrels to 330.1 million last week, indicating stronger demand.

Meanwhile, the IEA cut its global demand growth forecast on Wednesday, citing a weakening world economy and stubbornly high prices.

Traders are also closely watching the situation in the Middle East after US Defence Secretary Leon Panetta warned that the United States is "fully prepared" for any confrontation with Iran over the strategic Strait of Hormuz.

Crude producer Iran late last month threatened to close the strait -- a chokepoint for one-fifth of the world's traded oil -- in the event of a military strike or sanctions from the West over its nuclear programme.

Western powers have accused Iran of trying to build an atomic bomb, but Tehran has insisted its nuclear activities are for peaceful purposes.

Copyright AFP (Agence France-Presse), 2012