Thursday, January 26 2006 11:02 Hrs (IST) - World Time -

Singapore: Oil prices continued lower in Asian trade today (Jan 26,2006) following an increase in US inventories and an apparent easing of tensions over developments in key producers Iran and Nigeria, dealers said.

At 11:25 am (local time), New York's main contract, light sweet crude for March delivery, was down 15 cents at 65.70 dollars a barrel from its close of 65.85 dollars in the United States yesterday (Jan 25,2006).

"The fundamentals are quite bearish (negative for prices) the (US) inventory data essentially confirmed that the market is supplied with product," said Victor Shum, a Singapore-based analyst with Purvin and Gertz.

The US Department of Energy (DOE) report yesterday showed increases in gasoline and distillates stocks nearly three times higher than market expectations.

Supplies of distillate products, used to make heating fuel and diesel, rose 1.8 million barrels to 136.5 million in the week to January 20, the DoE said.

Reserves of motor gasoline, or petrol, were up 3.2 million barrels at 214.8 million.

Crude stocks fell 2.3 million barrels to total 319.1million barrels but this level was still "Well above the upper end of the average range for this time of year", the DoE said.

On the geo-political front, Shum believes that a cooling-off is taking place in Iran and Nigeria.

"Rhetoric over Iran has cooled and Nigeria has stepped up security around the delta area. With the latest inventory data out, the market is focusing on fundamentals,"Shum said.