Oil prices extend losses

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World oil prices slipped on Monday, after heavy losses last week, as traders eyed the stronger dollar amid ongoing jitters about the economic impact of the eurozone debt crisis, analysts said.

New York's main contract, light sweet crude for delivery in July, fell 22 cents to 69.82 dollars a barrel in late morning trade.

London's Brent North Sea crude for July dropped 55 cents to 71.13 dollars per barrel.

The euro meanwhile dipped to 1.2414 dollars on Monday, as the eurozone crisis cast a shadow over the outlook of the shared European currency.

A stronger US unit makes dollar-priced crude more expensive for buyers using weaker currencies, denting demand, which leads to lower prices.

Crude oil had plunged in value last week, nearing 10-month lows, as traders worried about the eurozone crisis, weak US unemployment data and falling global share prices.

The European single currency had plummeted last week to a four-year dollar low, as fears grew about massive debt and high public deficits in the eurozone.

Oil market analysts said that supply still outweighed demand, while the European debt crisis remains a key concern for investors.

"Globally we still have very high product and crude stock, and not many signs that demand outside of China is really strong," said Jason Feer, vice-president of Argus Media energy market analysts.

Victor Shum, senior principal of energy consultants Purvin and Gertz in Singapore, said oil prices are likely to remain subdued.

"I think it's going to take some time for investors to regain confidence. Given the financial turmoil in Europe, it's unlikely for oil to rebound quickly," Shum said.

Elsewhere on Monday, oil giant BP faced mounting pressure to get control of a massive oil slick after the US government threatened to take over the response to the month-old environmental disaster.

"If we find that they're not doing what they're supposed to be doing, we'll push them out of the way," said Interior Secretary Ken Salazar.

Salazar insisted that the full force of the federal government was bearing down on BP, which is legally responsible for dealing with a ruptured pipe that has been gushing oil into the Gulf of Mexico from the wreckage on an offshore rig since April 22.

He lashed out at BP for missing "deadline after deadline" as its latest attempt to cap the leak was hit with further delays.

© 2010 AFP

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