Oil prices fell below $83 a barrel Thursday in Asia as investors worried a 20 percent rally in the last few weeks is not justified by sluggish U.S. crude demand.
Benchmark crude for February delivery was down 33 cents to $82.85 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. On Wednesday, the contract rose $1.41 to settle at $83.18, a 15-month high.
Investors have brushed off signs of weak U.S. oil demand while bidding up crude prices from $69 a barrel in mid-December. The Energy Department's Energy Information Administration said Wednesday that crude supplies rose last week.
"Above the $83 level, we would be viewing this price advance as falling within the 'bubble' category, a scenario that could play out in a much sharper than expected price plunge," Galena Illinois-based Ritterbusch and Associates said in a report.
Cold weather in parts of the U.S., Europe and Asia have helped support the recent jump in oil prices, as traders expect supplies of crude products such as heating oil to run low.
"With a colder-than-usual winter in most parts of the Northern Hemisphere, oil prices remain buoyant and well supported," Barclays Capital said in a report. "The cold snap that has engulfed the U.S. has led to a plunge in heating oil inventories."
In other Nymex trading in February contracts, heating oil fell 1.06 cents to $2.19 a gallon and gasoline dropped 0.6 cent to $2.13 a gallon. Natural gas futures rose 6.8 cents to $6.08.
In London, Brent crude for February delivery fell 30 cents to $81.59 a barrel on the ICE Futures exchange.
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