Oil prices fall on profit-taking

1st July 2011, Comments 0 comments

World oil prices fell on Friday as traders took profits from recent gains that stemmed from a weaker dollar and easing concerns over Greece's debt crisis.

Brent North Sea crude for delivery in August sank $1.03 to $111.45 in early London trade.

New York's main contract, West Texas Intermediate for August, fell 61 cents to $94.81 a barrel.

"We are seeing some profit-taking now as prices consolidate," said analyst David Morrison at trading group GFT.

Oil prices have rallied for much of the week after a vote in the Greek parliament eased worries about a potential eurozone default that could slash global energy demand.

Greece's parliament on Thursday passed a tough austerity plan to avert a debt default that risked shaking the rest of Europe and the global financial system.

The passage of the measures paved the way for the release of more funds to Athens from a 110 billion-euro ($160-billion) European Union-International Monetary Fund rescue package.

The measures include tax rises and spending cuts expected to increase short-term economic hardship, which have triggered a general strike and violent street protests in the country.

A weaker greenback has also supported oil as it boosts demand for the dollar-priced commodity.

"The weaker dollar, Greece's successful passing of austerity measures and supportive (US) Midwest manufacturing data all helped support crude oil prices," said Ker Chung Yang, a Singapore-based analyst at Phillip Futures.

Crude futures had tumbled last week when the International Energy Agency decided to tap strategic oil stocks in a bid to rein in high-flying energy prices.

The IEA unexpectedly decided to release 60 million barrels over the course of a month, to make up for the loss of output from Libya, where rebels have been battling to oust veteran leader Moamer Kadhafi.

"Oil prices slumped last week following the IEA's surprise announcement," added Morrison

"This week has seen crude recover strongly, leading many analysts to conclude that the IEA's decision has backfired badly.

"The move has also heightened tensions between OPEC members and the consumers represented by the IEA."

The IEA, which represents 28 oil-importing nations, has called on the 12-nation Organization of the Petroleum Exporting Countries (OPEC) to pump more crude and precent high oil prices harming the global recovery.

© 2011 AFP

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