Oil prices slip after bouncing above $104

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World oil prices fell on Tuesday, as many traders took profits, after fears of spreading Middle East unrest sent the market briefly above $104 per barrel.

Brent North Sea crude for delivery in April dipped 81 cents to $102.27 a barrel in late afternoon London trade.

It hit a two-year high above $104 Monday on growing concerns that Egypt-style unrest occurring in the oil-rich Middle East could disrupt the supply of crude to the West, traders said.

Elsewhere on Tuesday, New York's main contract, light sweet crude for March delivery, was down 53 cents at $84.28 a barrel.

"A series of protests across the Middle East, as well as upbeat China's trade numbers, pushed Brent past February peaks and above $104 in afternoon trading on Monday," said VTB Capital commodities analyst Andrey Kryuchenkov.

"Reports of Iranian forces firing tear gas at protesters in the heart of Tehran during a banned opposition rally helped to push prices higher alongside news of a protest in Bahrain where the Shi'ite majority is ruled by a Sunni royal family.

"Moreover, clashes between government backers and pro-reform protesters rocked Yemen's capital yesterday with violence escalating since last week."

Kryuchenkov also forecast that Bren oil could soar above $106 in the coming days, if unrest worsens.

"Should violence escalate in the Middle East, we could well see a test of our tentative resistance around $106.1 in London, if the current uptrend holds," he added.

Prices have edged up steadily as demonstrators in various Arab states draw inspiration from pro-democracy protests that led to the ouster of leaders in Tunisia and Egypt. Unrest has followed in Iran, Yemen and Bahrain.

"While unrest in Egypt appeared to wane with the exit of president (Hosni) Mubarak last week, fresh protests regarding labour disputes have picked up. In addition, other countries in the region are also facing smaller protests," said David Hart, energy analyst at Westhouse Securities.

"These issues, combined with strong growth in Asia, have continued to push Brent crude prices to multi-year highs while WTI remains under pressure from localised over-supply."

A record price gap exists between New York's benchmark West Texas Intermediate (WTI) crude and Brent due to abundant crude supplies in the United States, where the Cushing depot in Oklahoma is nearly full.


© 2011 AFP

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