Tuesday May 13, 04:54 AM
Oil eases below $124 a barrel in Asian trading - UPDATE
SINGAPORE (Thomson Financial) - World (WRGR.TA - news) oil prices eased further on Tuesday, trading below $124 a barrel as profit-taking helped cool a red-hot market.
Crude oil prices have more than doubled in the past year and have rocketed about 25 percent since the start of 2008, when they broke the $100 barrier.
'Oil prices have simply risen too far and too fast over a short period of time with really no reasons driving the rally, other than investor and technical interest,' said Victor Shum, an analyst at Purvin and Gertz energy consultancy in Singapore.
New York's main oil futures contract, light sweet crude for June delivery, was 73 cents lower at $123.50 from $124.23 at the close of trading in New York on Monday.
The benchmark contract traded lower for most of the New York session, but struck a record intraday high of $126.40.
Brent North Sea crude for June delivery was 51 cents lower at $122.40 a barrel after a drop of $2.49 to $122.91 on Monday in London.
Along with an inflow of investor funds, analysts have cited a variety of other factors supporting this year's price spikes, including rising energy demand from Asian powerhouse economies China and India, and OPEC's refusal to pump more crude.
Oil prices were also moving in line with changes in the U.S. dollar but Shum said that connection has weakened in recent days.
The dollar fell to a record of 1.6002 per euro on April 22 but has regained ground since then.
A weaker greenback makes dollar-priced crude cheaper for holders of stronger currencies.
Analysts say the market is looking overbought as threatened disruptions to Middle East supply have failed to materialise, and as violent threats to output in Nigeria are increasingly priced in.
'There is still scope for a correction in oil pricing,' Shum said. 'The support level is $120 at this point.'
U.S. President George Bush will raise the issue of high oil prices and their negative economic impact when he visits Saudi Arabia on Friday, White House spokeswoman Dana Perino said.
Saudi Arabia is the biggest producer in the Organisation of the Petroleum Exporting Countries (OPEC), which produces about 40 percent of the world's oil.
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