Oil prices extended losses in Asian trade today on weak energy demand and news the US commodity and options regulator was looking to tighten controls in the energy futures market, analysts said.
New York's main futures contract, light sweet crude for delivery in February, fell 49 cents to $78.90 per barrel.
Brent North Sea crude for March delivery dropped 57 cents to $78.00 a barrel.
Prices dipped after the US Department of Energy (DoE) reported yesterday an unexpected increase in US petroleum reserves, analysts said.
New York crude rose to a 15-month high of $83.95 Monday on the back of robust Chinese data but subsequently tumbled on news that Beijing was tightening money supply in a bid to tame economic growth.
"I think this was a much-needed correction... Because oil had run up to almost $84 per barrel," said Tony Nunan, a risk manager with Mitsubishi Corp in Tokyo said.
"A lot of this optimism and euphoria was driven by Chinese demand." Like the US, China is a major oil consumer.
Nunan said the increase in US energy stockpiles "was a reality check because people realised that the inventories were still high... So there's a lot of fear and uncertainty in the market now."
The DoE said crude reserves soared 3.7 million barrels in the week ending January 8, far more than the consensus forecast for a 1.0-million-barrel gain.
