Oil prices slide under 90 dollars

4th January 2011, Comments 0 comments

World oil prices tumbled on Tuesday, falling under 90 dollars in New York as many investors took profits on recent gains to two-year highs.

New York's main contract, light sweet crude for February delivery, dived 2.38 dollars to 89.17 dollars per barrel.

Brent North Sea crude for February sank 1.71 dollars to 93.13 dollars in London trade.

Prices jumped to fresh two-year highs on Monday on growing confidence that global demand will increase after the US economy showed more signs of recovery.

New York crude soared as high as 92.58 dollars and London Brent hit 96.17 dollars for the best levels since October 2008.

The market edged higher in early deals on Tuesday, before hitting reverse gear amid heavy profit-taking.

"The market's just not sustaining the recent gains. A little bit of a correction is going on," said BNP Paribas Tom Bentz, cited by Dow Jones Newswires.

The oil market was also hampered by a late rebound in the dollar, which makes dollar-priced crude more expensive for buyers using weaker currencies. In turn, that tends to dent demand and prices.

Prices rose on Monday after a batch of upbeat data in the United States, the world's biggest oil-consuming nation.

US manufacturing activity grew for the 17th straight month in December, bolstering confidence that the US economic recovery was gaining momentum while construction spending rose 0.4 percent in November to reach its highest point in five months.

"This adds to a sense of optimism about the accelerating US economy," said Victor Shum, senior principal for Purvin and Gertz international energy consultants in Singapore.

Traders had also been heartened by data released by China on Saturday showing manufacturing growth eased last month, suggesting Beijing's attempts to cool the soaring economy could be working.

Meanwhile, investors were looking ahead to Wednesday's weekly snapshot of American energy inventories, as well as a raft of key data in Europe and the United States later in the week.

© 2011 AFP

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