Oil prices down in Asian trade, may rise due to Middle East crisis

Oil prices eased in Asia on Monday on softer United States demand, but tensions in the Middle East, where jihadists have declared an Islamic state straddling Iraq and Syria will likely keep prices high, analysts said.

US benchmark West Texas Intermediate for August delivery was down 26 cents at US $105.48 a barrel in late-morning trade and Brent crude dropped 22 cents to US $113.08.

Analysts said investors are concerned after data last week showed that consumer spending in the United States, the world's biggest economy, rose by a mere 0.2% in May after flattening in April. US jobless claims, another barometer for the giant American economy, totalled 312,000 in the week ending June 21, down just 2,000 from the week before. As the world's top oil consuming nation, the health of the US economy is a key influence on oil prices.

Investors were also monitoring the latest news from the oil-producing Middle East, after militants said they were establishing a caliphate covering wide areas of Iraq and Syria on Sunday.

French bank BNP Paribas has raised its average oil price forecasts for 2014 and 2015 by 4-6% because of the developments in the Middle East. "Geopolitics in the Middle East has recently introduced concerns about supply disruptions and, consequently, led to a sharp increase in global crude oil prices," it said in a commentary. While actual supply shortages have not happened yet, "the possibility of uncertainties persisting and pushing up the price higher cannot be ignored", it added.

Other analysts have noted that Iraqi oil fields have remained operational so far.