Oversupply concerns play havoc on Asia oil prices

New York's main contract, light sweet crude for delivery in February, was down a cent to US$95.55 a barrel in the afternoon while Brent North Sea crude for March delivery gained 34 cents to US$112.05.

“On one hand, we have geopolitical risks that are supporting prices,” said Victor Shum, managing director at IHS Purvin and Gertz in Singapore.

But he said price rises were being limited by oversupply amid weaker demand, saying there were fears of “an oversupply in the physical market that puts downward pressure on oil.”

There are also worries in the market of a supply disruption following the seizure by Islamic militants of a gas field in Algeria and a bloody rescue mounted by government forces.

Algeria is a member of the OPEC oil cartel and analysts fear that any escalation of the conflict could lead to supply disruptions.

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