Oil prices takes breather in Asian trade after plunging to five-year lows

SINGAPORE (AFP) - Crude prices fell in Asia Tuesday but losses were curbed as dealers took a breather after days of sharp sell-offs following OPEC's decision to hold output levels despite global oversupply.

US benchmark West Texas Intermediate (WTI) for January delivery was down 66 cents to US$68.34 while Brent crude for January was down 61 cents to US$71.93 in mid-morning trade.

Research house Capital Economics said "a degree of calm was returning to the markets" after a free-fall that saw both contracts plunge to five-year lows.

Daniel Ang, investment analyst at Phillip Futures in Singapore, said "prices remain volatile as the market adjusts after last week's 10 per cent drop".

WTI closed Monday US$2.85 up from Friday's settle price, after initially sinking as low as US$63.72, a level last seen in July 2009. In London, Brent gained US$2.39 after earlier falling to an October 2009 low of US$67.53.

Crude prices have tumbled since the 12-nation Organization of the Petroleum Exporting Countries on Thursday said it would to keep its collective output ceiling at 30 million barrels per day, where it has stood for three years.

OPEC's powerful Gulf members, led by kingpin Saudi Arabia, resisted the calls for a cut from poorer members, including Venezuela and Ecuador, unless they are guaranteed market share, particularly in the United States where rising production of shale oil has contributed to the global glut.

"The frenetic activity at the end of last week - notably the apparent free-fall in oil prices - was almost certainly exaggerated by the thin trading conditions due to the extended US holidays," Capital Economics said, referring to the Thanksgiving Holiday last week.

US financial markets were closed Thursday for Thanksgiving, while trading was shortened on Friday.

With no major data releases on Tuesday, dealers are next expected to focus on the latest US stockpiles report to be released Wednesday for clues about demand in the world's top crude consumer, analysts said.