LONDON: Oil prices dropped on Friday and were likely to stay under $80 because of high energy inventories in the United States, the world s biggest energy-consuming nation, analysts said.
New York s main contract, light sweet crude for December delivery, fell 21 cents to $77.25 a barrel after slumping by more than $2 on Thursday.
Brent North Sea crude for January delivery lost 13 cents to $77.51 in early London trading on Friday.
Prices slid with relatively swollen US stockpiles still weighing, said VTB Capital commodities analyst Andrey Kryuchenkov in London.
New York crude prices on Wednesday breached $80 a barrel after government data showed crude reserves in the United States fell 900,000 barrels in the week ending Nov. 13.
However levels remain relatively high with demand struggling to recover following the financial crisis.
Oil prices slumped on Thursday as the dollar rose and owing to renewed doubts about a sustainable global economic recovery, traders said.
An array of largely unimpressive US economic data caused a fall on Wall Street as investors sought safety in the dollar, a traditional safe haven currency in times of distress.
A stronger greenback makes dollar-denominated commodities – like crude oil and gold – more expensive for buyers using other currencies. That tends to reduce demand for such raw materials, eventually weighing on prices.
Oil under $78 a barrel was a buying opportunity, said analyst Victor Shum at the Purvin and Gertz energy consultancy in Singapore.
The oil market has shown resistance against breaking through the $80 level simply because the sustainability of economic recovery.
They were also struggling to find support owing to strong supplies and weak demand, he added.
In a volatile week for markets generally, crude oil prices soared $2.50 on Monday owing to a weak dollar and data showing that the Japanese economy expanded 1.2 percent in the July-September period, traders said.
It was the second straight quarter of expansion in the world s second-largest economy.
Meanwhile, OPEC president Jose Maria Botelho de Vasconcelos has signalled that $75-$80 oil is an adequate level to allow for a global economic recovery.
The Organization of Petroleum Exporting Countries (OPEC) pumps about 40 percent of the world s oil.
The oil market has also this week followed events in oil-exporter Nigeria, where its main armed group has accused the military of staging a dawn raid on a village in the restive crude-producing region, saying it could threaten peace talks. – AFP
