Oil prices slide

6th January 2011, Comments 0 comments

World oil prices slid on Thursday following strong gains a day earlier and after slightly worse-than-expected unemployment data in the United States -- the world's biggest oil consumer.

Brent North Sea crude for delivery in February dropped 94 cents to 94.56 dollars a barrel in late London deals.

New York's main contract, light sweet crude for February slumped 1.91 dollars to 88.39 dollars.

"Crude prices have declined ... partly in correction of (Wednesday's) strong gains," said analyst Brenda Sullivan at the Sucden Financial Research brokerage in London.

The market also reacted to data showing that new US claims for unemployment benefits rose slightly more than expected last week.

Jobless claims rose to 409,000 for the week ending January 1, from the prior week's upwardly revised figure of 391,000 and compared with analyst forecasts for 405,000.

Oil prices meanwhile were also coming off solid gains Wednesday due to "better US economic data and a larger-than-expected 4.2-million-barrel fall in US crude oil inventories last week," the Commonwealth Bank of Australia said in a note to clients.

The decline in reserves were almost double analyst forecasts for a drop of 2.2 million barrels.

Meanwhile, US private hiring and service sector growth numbers released Wednesday also exceeded analysts' expectations and boosted confidence that the US economic recovery is on track.

Figures provided by private payrolls firm ADP showed the American private sector adding a seasonally adjusted 297,000 jobs in December, more than triple the number in November and above forecasts for 100,000 new hirings.

Separately, the Institute of Supply Management said its non-manufacturing index rose 2.1 points to 57.1 percent last month.

Economists had forecast that the index would show a more moderate rise to 55.7 percent. Any figure above 50 signifies growth in the crucial sector.

Oil prices began the week by reaching two-year highs amid confidence in increased global demand after the US economy showed more signs of recovery.

© 2011 AFP

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