Oil prices hit by profit-taking in Asian trade

SINGAPORE - Oil prices eased in Asian trade Thursday as investors locked in profits after they hit their highest levels this year on forecasts of stronger demand.

Analysts said traders will keep their eye on a meeting next week by the Federal Reserve for more clues about its plans to wind down its massive stimulus for the US economy.

New York's main contract West Texas Intermediate for March delivery was down 31 cents at $96.42 a barrel mid-morning trade after rising by $1.76 in closing US trade Wednesday.

Brent crude for March dipped 32 cents to $107.95 after gaining $1.54.

The International Energy Agency in its monthly report projected demand for crude would grow 1.3 million barrels per day in 2014, up from a previously forecast increase of 1.2 million. It said consumption accelerated at the end of 2013 as advanced economies, led by the United States, saw growth pick up.

That came as the International Monetary Fund raised its global growth forecast for the first time in nearly two years - predicting 3.7 per cent expansion in 2014, up from its earlier 3.6 per cent estimate. It grew three per cent last year.

The optimistic outlook was fuelled by a solid recovery in the United States while other countries move away from austerity.

Eyes are now on the US Fed, which last month said it would cut its bond-buying scheme by $10 billion a month to $75 billion as of January.

"Markets will be watching for outcomes from the Fed meeting next week, particularly if bond purchases are to be reduced," Sanjeev Gupta, head of the Asia-Pacific oil and gas practice at consultancy firm Ernst and Young, told AFP.

David Lennox, resource analyst at Fat Prophets in Sydney, said tapering is a sign of a stronger US economy, which should be good news for the rest of the world.

"The fact that they are perhaps considering further tapering may indicate that the US is growing stronger," Lennox told AFP. "In turn, the move may start giving the market confidence," he added.

As the world's biggest economy, the US is a key engine for the global economic growth.