Friday October 16, 05:34 PM
Oil prices slip after breaching 78 dollars
LONDON (AFP) - The price of oil fell Friday on profit-taking after striking a year-high above 78 dollars in a strong week for the market, traders said.
Prices have climbed steadily in recent trading sessions, buoyed by a weak dollar that has bolstered investor risk appetite for assets such as oil.
New York's main contract, light sweet crude for November delivery, hit 78.17 dollars a barrel in Asian trading hours -- the highest level since October 14, 2008 -- after official data showed a pick-up in US gasoline (petrol) demand.
The contract later pulled back to stand at 77.32 dollars, down 26 cents from Thursday's closing level.
Brent North Sea crude for December delivery dropped 30 cents to 75.93 dollars in late afternoon London trade on Friday.
"Crude prices were trading a little lower ... due to profit taking," said Sucden Financial Research analyst Nimit Khamar.
"The recent price rise has been very impressive and markets could well test 80 dollars but in our opinion a correction next week is the likely scenario to back below 75 dollars and even to the low 70s given oil fundamentals remain poor, global inventories are still high and demand recovery is far from convincing."
A US government report on Thursday showed US gasoline stocks fell 5.2 million barrels last week. Analysts polled by Dow Jones Newswires had expected a rise of 700,000 barrels.
The fall in gasoline stocks indicates rising demand and tightening supplies, supporting prices, traders said.
US crude reserves meanwhile rose 400,000 barrels last week, lower than most analysts' expectations for a gain of 600,000 barrels.
Despite signs of a demand pick-up, appetite for oil has plunged amid the world economic downturn, the most severe since the 1930s.
Oil prices tumbled from historic highs of more than 147 dollars in July 2008 to about 32 dollars in December because of the global recession but have since risen on recovery hopes.
World oil demand will decline slightly in 2009 but start growing again next year, the OPEC oil producers' cartel said this week.
Global crude demand this year was expected to fall 1.41 million barrels per day (bpd) to 84.24 million bpd, the Organization of Petroleum Exporting Countries said in its October report.
A month ago, OPEC had been pencilling in a bigger contraction of 1.56 million bpd for this year.
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