Tuesday, March 21 2006 11:37 Hrs (IST) - World Time -

Singapore: Oil prices in Asian trade continued lower to test the key 60 dollar support level today as expectations of a build in US crude stockpiles this week depressed prices further, dealers said. At 11:13 am (0543 IST) New York's main contract, light sweet crude for delivery in April, was down 42 cents to 60 dollars a barrel from its close of 60.42 dollars in the United States yesterday. Crude futures closed sharply lower in New York yesterday, losing more than two dollars despite fresh unrest in Nigeria, Africa's largest crude producer.

"The fundamentals are bearish (negative for prices) and I guess this is the only explanation for the sharp losses we saw (yesterday)," said Dariusz Kowalczyk a Hong Kong-based senior investment strategist with CFC Seymour.

Last week US crude inventories rose 4.8 million barrels in the week to March 10 to stand at 339.9 million the highest level since April 1999.

While many analysts expect this week's report, due out Wednesday, to show a 2.8 million barrel rise in crude inventories, the build could be as much as four million barrels, Kowalczyk said.

Also adding pressure to prices is the expected slump in demand in the second quarter of the year as the northern hemisphere winter ends.

"We are entering the lowest demand period of the year sitting on huge levels of inventories," said Oppenheimer analyst Fadel Gheit.