Oil prices were down in Asian trade today as investors locked in profits from recent gains. New York's main contract, light sweet crude for delivery in March, was down 16 cents to $96.52 a barrel and Brent North Sea crude for March delivery shed 20 cents to $112.22.
Prices had ended higher in overnight trades on signs of stronger economic growth in Europe and fresh economic stimulus measures announced by the Japanese central bank. Over the longer term, oil is likely to remain supported by encouraging news from Europe, the US and Japan, analysts said.
A survey published yesterday showed that German investor sentiment has struck the highest levels since the start of the eurozone debt crisis in 2010 as the outlook for Europe's top economy continues to brighten.
The Bank of Japan, under pressure from Japanese Prime Minister Shinzo Abe to devalue the yen, adopted a 2 per cent inflation target and announced plans to begin open-ended asset purchases next year in a bid to kick-start the struggling economy.
In the United States, fears of a political gridlock over fiscal issues appear to have eased. Fiscal difficulties are "still there but the risks of falling/jumping off a cliff are much lower than in December", DBS Research said in a market commentary.
"Moreover, Republicans appear to be backing away from a showdown on the debt limit. Increasingly they view the threat of shutting down the government -- unless their spending demands are met -- as counter-productive," it added.
"More and more of the right words are being heard and to the extent markets are rebounding from excessive fiscal fears, this is more soothing music."