Oil prices mixed in Asia

World oil prices were mixed in Asian trade on Monday amid negative news on the global economy, which could dampen demand for oil, dealers said.

In morning trade, New York's main oil futures contract, light sweet crude for July delivery, slipped four cents to 127.31 dollars per barrel.

The benchmark contract had closed at 127.35 dollars on Friday at the New York Mercantile Exchange.

London's Brent North Sea crude for July delivery gained 13 cents to 127.91 dollars a barrel, after settling at 127.78 dollars on Friday.

Prices fell heavily last week as traders took profits from a record-breaking run that saw crude surge beyond 135 dollars on concerns about tightening energy supplies.

At 135 dollars a barrel, oil was up by more than a third since the start of 2008.

David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney, said that the market barely moved from Friday's close.

"Several factors may affect movement but the recent reporting on economic impacts may have had tempering effects," said Moore.

Prices slumped by more than four dollars on Thursday amid fears of a potential easing in demand, despite a US government report that showed energy stockpiles had tumbled last week.

The US Energy Information Administration said Wednesday that American crude reserves sank 8.8 million barrels in the week ending May 23 while gasoline reserves dived by 3.2 million barrels.

Prices jumped higher after the news but eventually slid as some analysts speculated about falling energy demand due to sky-high fuel prices.

"The recent see-saw pattern is a signal that perhaps the market has peaked for the time being," said Victor Shum, an analyst at Purvin and Gertz energy consultancy in Singapore.

"The economic outlook in the US and UK looks a little weak and there has been concern over the slowing demand for oil," he said.

Despite recent price losses, the high cost of crude continued to spark international concern.

Japanese Prime Minister Yasuo Fukuda called Sunday for steps to ensure more oil production and supply stability.

"We should take this rapid rise in the oil price very seriously. What is important is that more oil should be produced and we should invest in this. We need a stable supply."

Japan currently holds the presidency of the Group of Eight leading industrialised countries. France has urged G8 economy ministers to call on oil producers to hike production.

German Chancellor Angela Merkel on Sunday also supported the recent proposal by French President Nicholas Sarkozy to cap value-added tax on oil across the European Union to help countries deal with soaring prices.

The Organisation of the Petroleum Exporting Countries (Opec), which pumps 40 percent of the world's oil, is reluctant to bend to demands that it pump more oil to dampen the red-hot market.

Opec president Chakib Khelil on Saturday reiterated the cartel's long-standing view that speculators and the falling US dollar were to blame for runaway prices.

"The consensus is that the crisis is not over and there is going to be a continuing impact on the prices of oil because of speculation," he added.

Khelil, also Algeria's energy minister, said Saturday that Opec would not review the situation again until it meets in Vienna on September 9.