Oil prices steady after 2008 peaks

7th April 2011, Comments 0 comments

World oil prices held steady Thursday ahead of a key European interest rate decision after the market hit highs last seen in 2008 on the back of Libya worries and the weak dollar.

In late morning deals, Brent North Sea crude for delivery in May slid 15 cents to $122.15 a barrel after soaring the previous day to $123.37, the highest level since August 4, 2008.

New York's main contract, light sweet crude for delivery in May, was flat at $108.83. On Wednesday, it hit $109.15, a level last seen in September 2008.

"This morning, crude oil prices consolidated and trading volumes are fairly light, as investors might remain cautious," said Sucden analyst Myrto Sokou.

The European Central Bank is expected to announce its first rate hike in two years, at 1145 GMT.

Oil forged two-and-a-half-year peaks on Wednesday amid concerns about the war in Libya and as the dollar weakened against the euro.

The dollar is trading at its lowest level since January 2010 against the euro.

"The main focus will switch to the currency movements today, as the rate decisions will possibly affect the direction of the euro," Sokou said.

A falling dollar encourages investors to buy dollar-priced commodities in a bid to protect their capital from a loss in value. That tends to push oil prices higher.

Prices also steadied on Thursday, one day after Libyan rebels made their first crude shipment from the conflict-hit country.

Victor Shum, senior principal for Purvin and Gertz energy consultants in Singapore, said disruption to Libyan oil supplies appeared to be easing after rebels fighting veteran leader Moamer Kadhafi started to ship crude.

The Greek-owned, Liberian-registered tanker carrying $100 million of crude left a terminal near Tobruk, 130 kilometres (80 miles) from the Egyptian border, on Wednesday.

The cargo was the first consignment of oil to leave Libya since UN-backed air strikes began on March 19 against Kadhafi's crackdown on the rebels.

Shum said dealers continued to monitor the volatile situation in the oil-rich Middle East and North Africa region, where popular uprisings have already toppled the leaders of Tunisia and Egypt.

© 2011 AFP

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