Crude-oil futures dropped in Asia Friday as investors booked profits after prices settled at three-month highs Thursday, fuelled by tightening inventories, heightened Middle East tensions and positive comments from German Chancellor Angela Merkel.
News that the U.S. may be considering a release of oil reserves also weighed on crude prices, traders said.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at $95.23 a barrel at 0632 GMT, down $0.37 in the Globex electronic session. October Brent crude on London's ICE Futures exchange fell $1.12 to $114.15 a barrel.
Although production at the North Sea Buzzard oil field was boosted recently and a September cargo loading was accelerated, the combination of field maintenance and continued loss of Iranian supply availability could keep the Brent market supported into next month, Jim Ritterbusch at Ritterbusch and Associates said late Thursday, noting that the European benchmark may advance toward $118-$120 a barrel month-end, when the field is expected to undergo major maintenance.
Persistent fears of further supply cuts from Iran will also help support prices, as will the latest Syria-Lebanon unrest, a Tokyo-based trader said, tipping support for West Texas Intermediate crude at $93 a barrel ahead of the Muslim Id al-Fitr holiday in some Asian markets Monday.
Violence in Iraq has also surged this week.
"Overall, we remain bearish on Iraq's prospects for sustaining any significant increases in output, given the increased signs of instability and uncertainty," Barclays Capital said in a research note late Thursday.
Meanwhile, economic news from the U.S. and Europe was mixed. U.S. housing starts Thursday came in weaker than forecast. Housing starts fell 1.1% in July, sharper than the 0.5% decline predicted by economists polled by Dow Jones Newswires, while jobless claims last week increased to a seasonally adjusted 366,000, in line with expectations.
Ms. Merkel said Thursday that Germany is "committed to do everything we can in order to maintain the common currency."
"Merkel's comments are positive, but we need to be careful about Europe," a second Tokyo-based trader said.
Investors will also be watching out for Federal Reserve Chairman Ben Bernanke's Jackson Hole speech due later this month, he said.
"We're expecting some monetary stimulus then," he said, noting that this would be bullish for crude prices.
Nymex reformulated gasoline blendstock for September--the benchmark gasoline contract--fell 302 points to $3.0530 a gallon, while September heating oil traded at $3.1009, 220 points lower.
ICE gasoil for September changed hands at $978.50 a metric ton, up $1.25 from Thursday's settlement.
Write to Surabhi Sahu at surabhi.sahu@dowjones.com
