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Page added on September 23, 2009

Light oil prices ease but stay above $71 Wednesday trading

Oil prices eased in Asian trade Wednesday on profit taking but stayed above $71 a barrel ahead of this week’s Group of 20 summit and a US central bank meeting, analysts said. New York’s main contract, light sweet crude for November delivery, was down 44 cents to $71.32 a barrel in morning trade. The October contract expired on Tuesday.

Investors are closely monitoring the results of a US Federal Reserve policy meeting that could indicate the pace of economic recovery of the United States, the biggest energy consumer. The meeting ends Wednesday. Leaders from the Group of 20 developed and developing nations are also expected to discuss the state of the global economy when they meet later this week in the US city of Pittsburgh.

Energy demand plunged after the global economy slipped into its worst recession since the 1930s late last year. This sent oil prices tumbling from historic highs of more than $147 in July 2008 to around $32 in December. Prices have since clawed back to around $70, but investors remain concerned over the pace of the global economic recovery.

Analysts expect the US central bank to keep key interest rates at existing levels of virtually zero percent in a bid to stimulate domestic demand and sustain the recovery.

“Concerns over the sustainability of the (US) recovery mean that the Fed will not tighten policy anytime soon,” said research house Capital Economics. “The only changes we expect at the (Fed) meeting are a slightly more upbeat tone in the statement.”

Analysts said the weakness in the US dollar is also helping keep oil prices buoyant.