Oil prices easier in Asian trade

SINGAPORE (AFP) - Oil prices were easier in Asian trade Tuesday after rising sharply overnight following a warning of a looming supply crunch from the IEA, dealers said.

They said the market was also waiting for the US government's regular weekly report on energy inventories due out on Wednesday.

At 10:38 am (0238 GMT), New York's main contract, light sweet crude for August delivery, was three cents lower at 72.16 US dollars a barrel from 72.19 dollars in late US trades Monday.

Brent North Sea crude for August delivery fell 33 cents to 75.45 dollars.

Oil prices have been edging closer to last summer's all-time record highs of 78.64 dollars per barrel in London and 78.40 dollars in New York, and the International Energy Agency (IEA) on Monday added to the bullish outlook.

It warned that the Organisation of the Petroleum Exporting Countries' (OPEC) spare production capacity would shrink to bare-bones levels by 2012 amid robust economic growth, particularly in Asia and the Middle East.

"Despite four years of rising oil prices, this report sees increasing market tightness beyond 2010, with OPEC spare capacity declining to minimal levels by 2012," the IEA, a Paris-based body that seeks to coordinate the oil policies of leading consuming countries, said in its Medium Term Oil Market Report.

The market was quiet, however, waiting to see the US Department of Energy's weekly report on energy reserves on Wednesday, said Steve Rowles, an analyst with CFC Seymour in Hong Kong.

"We will find out tomorrow when the inventory numbers are out," said Rowles.

Gasoline (petrol) reserves, in particular, are keenly watched by the market because of strong demand in the United States which is in its peak-demand driving season when many Americans take to the roads for their holidays.

Nigeria also remains an area of concern for the market. Unrest in the oil producing south of the country has affected production in Africa's biggest crude producer.

Nigeria has seen its daily exports of 2.6 million barrels slashed by a quarter because of kidnappings and other unrest in the oil-producing region.