Oil prices slide after hitting five-month highs

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New York oil prices fell sharply on Thursday amid fears of eurozone debt contagion and after hitting five-month highs on news of a deal that should reverse the build-up of US crude stockpiles.

New York's main contract, West Texas Intermediate (WTI) light sweet crude for delivery in December, reached $103.37 a barrel -- the highest level since June 1. It later slid to $100.34, down $2.25 from Wednesday's closing level.

Brent North Sea crude for delivery in January slumped $2.67 to $109.72.

"Crude oil prices retreated in a healthy correction lower, tracking heavy losses in the global equity markets," said Myrto Sokou, an analyst at Sucden Financial Research.

Global stock markets fell on Thursday as France and Spain faced a sharp spike in borrowing costs and Germany warned Italy's new prime minister to move fast to avert an even deeper debt crisis.

New York crude meanwhile briefly jumped to five-month highs following a deal that reverses the build-up of crude stockpiles in the United States.

Canadian company Enbridge on Wednesday bought ConocoPhillips' 50-percent stake in the 330,000 barrel-per-day Seaway pipeline, which runs between the US Gulf of Mexico coast and the Cushing, Oklahoma oil storage hub.

Enterprise Product Partners, which owns the other 50 percent of Seaway, said it would reverse the pipeline to move oil to the Gulf coast refining hub from Cushing starting in mid-2012.

This is expected to further narrow the broad gap between London and New York oil prices caused by high stockpiles in Cushing.

"The reversal of the Seaway pipeline (has already) resulted in a significant narrowing of the WTI-Brent spread, due to the notion that the so-called US Midwest glut will now be resolved," Barclays Capital analyst Amrita Sen said.


© 2011 AFP

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