U.S. oil eases on profit-taking after rally on Mideast risk

By Meeyoung Cho

SEOUL (Reuters) - Crude oil futures dipped on Wednesday as investors took profits after prices rallied to two-week highs in the previous session on mounting geopolitical tension in the Middle East as Turkey downed a Russian warplane.

Brent had dropped 4 cents to $46.08 a barrel by 0224 GMT. It settled up $1.29, or 2.9 percent, at $46.12 a barrel on Tuesday, after hitting a two-week high at $46.50.

U.S. crude's West Texas Intermediate (WTI) futures shed 11 cents to $42.76 a barrel. They finished the previous session up 2.7 percent at $42.87, having touched their highest since Nov.11 at $43.46.

"In Asian hours you are seeing some profit-taking or some consolidation ... With the price falling slightly, but bullish sentiment is continuing," said Daniel Ang, an investment analyst at Phillip Futures Pte Ltd said, referring to increased geopolitical risk in the oil-producing Middle East.

Turkey shot down a Russian warplane near the Syrian border on Tuesday, saying the jet had violated its air space. Russian President Vladimir Putin said the plane warned of "serious consequences" for what he termed a stab in the back administered by "the accomplices of terrorists".

U.S. President Barack Obama and French President Francois Hollande pressed Russia on Tuesday to focus its attacks in Syria on Islamic State (IS) militants.

The United States and France separately agreed to ramp up military operations against IS in Syria and Iraq and coordinate intelligence on domestic threats following the worst attacks to hit France since World War Two.

Meanwhile, ANZ said in a note on Wednesday that investor sentiment had improved modestly as an upcoming OPEC meeting raised some hope of modest production cuts.

The bank also noted there had been a seasonal pick up in U.S. refinery utilisation rates, shrugging off expectations of large weekly gains in U.S. crude oil inventories.

Data from industry group the American Petroleum Institute data on Tuesday showed that U.S. crude inventories rose by 2.6 million barrels in the week to Nov. 20 to 488.3 million, compared with analyst expectations for an increase of 1.2 million barrels.

Asian stocks were mixed in early trading on Wednesday. The U.S. dollar was lower, hurt in part as the latest flare up in geopolitical tensions generated demand for safe haven Treasuries and drove their yields lower.

(Reporting by Meeyoung Cho; Editing by Michael Perry and Joseph Radford)