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Oil prices dip below $59 in Asian trade

business Updated: May 19, 2009 08:24 IST

AFP
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Oil prices fell in volatile Asian trade on Tuesday after soaring past the 59-dollar mark overnight, dealers said.

New York's main futures contract, light sweet crude for delivery in June, was down five cents to $58.98 a barrel in morning trade. The June contract expires later on Tuesday.

Brent North Sea crude for July tumbled 18 cents to $58.29.

Analysts said investors were looking for leads from signs of a quick rebound in the recession-mired US economy, with the escalation of violence in African crude producer Nigeria also a concern.

US stocks soared Monday after better-than-expected earnings from home improvement retailer Lowe's helped reinforce hopes for a recovery in the United States.

A strong US economy is a key growth engine for the world because it is a major export market for many countries.

"Oil seems to stay resilient in spite of ample supply as it continues to focus on the prospects of economic recovery and the rising risk of commodity price inflation," said Phil Flynn at Alaron Trading.

Prices were also boosted by rising violence in oil exporter Nigeria, where the country's main armed group said it had ordered a blockade of key shipping channels in a bid to inflict further damage on the energy industry.

Nigeria's military has urged oil firms to ignore the threat.

"Certainly the market is feeling more bullish if it's reacting to the situation in North Africa," said Mark Pervan, senior commodities analyst with ANZ Bank in Melbourne.

Unrest in the oil-producing Niger Delta region has reduced Nigeria's daily output to 1.76 million barrels compared with 2.6 million barrels in January 2006.