Oil prices lost ground in afternoon trade in Asia Tuesday, reversing earlier gains as traders turned cautious after recent market rallies, analysts said. New York's main futures contract, light sweet crude for delivery in August, shed 17 cents to 63.81 dollars in the afternoon. The August contract was to expire later Tuesday. Brent North Sea crude for September delivery fell 48 cents to 65.96 dollars. "What is causing (the price slide) is that caution is settling into both the equities markets and the commodities," said Victor Shum, senior principal for Purvin and Gertz energy consultants in Singapore. "Even though the earnings reports for the second quarter for the US companies have been bullish thus far, there remains caution for the prospect of economic recovery," he added. Prices had risen earlier in the day, fuelled by strong performances on Wall Street and escalating tension in oil-producing nation Iran. Iran's supreme leader Ayatollah Ali Khamenei warned on Monday against any attempt to destabilise the Islamic republic as reformists called for a referendum in the violent aftermath of last month's hotly-disputed presidential election. Shum also warned that pre-existing weak fundamentals in the oil market had yet to be resolved. "In the oil markets, the fundamentals are very weak, so the oil price rally is losing some steam, and we're seeing some pullback until we see some more positive news," he said.

Source