LONDON, Nov 1 (Reuters) - Oil eased on Thursday after earlier striking a record high beyond a barrel following a sharp decline in US crude stocks that stoked supply concerns and the US Federal Reserve's interest rate cut.
US crude closed in on an inflation-adjusted high of 1.70 hit in 1980 on the very day OPEC injected an extra 500,000 barrels per day in a failed attempt to check oil's relentless rise from in mid-August.
Oil dealers saw little standing in the way of the price blasting into triple digits.
''The market has its eyes on 0 a barrel and it really is the momentum that will carry it through,'' Rob Laughlin of MF Global said.
US oil rose as high as .24 a barrel before pulling back to .14, down 35 cents, by 1330 GMT. Brent crude also struck a record .71 before retreating to .21, down 42 cents.
Oil soared about 5 percent on Wednesday after US refiners drained 3.9 million barrels of crude from storage, mostly from tanks in Cushing, Oklahoma -- delivery point for the NYMEX oil contract.
The surprise decline came at a time when the world's thirst for oil is climbing towards its seasonal fourth-quarter peak as winter arrives in the northern hemisphere.
''Today's oil price recognises the current tightness in market fundamentals, especially ahead of increased seasonal demand,'' said Robin Batchelor of global asset manager BlackRock.
OPEC BLAMES SPECULATORS That is not the view of the Organization of the Petroleum Exporting Countries, supplier of more than a third of the world's oil.
OPEC oil ministers are blaming speculators, political tensions and a weak US dollar for driving up the cost of fuel and have resisted consumer calls for more oil.
''The question is if there is any shortage in the supply.
There is no ... shortage in crude oil,'' Qatar Oil Minister Abdullah al-Attiyah told reporters in Tokyo on Thursday.
''It's market-driven and the market is out of our control,'' he said, reiterating comments made earlier this week.
An OPEC supply increase of 500,000 bpd, agreed in September in a gesture to consumers worried about the economic impact of record prices, takes effect on Nov. 1.
Analysts have called the move too little, too late.
But top executives from oil majors Exxon Mobil and Royal Dutch Shell have said in recent weeks the market is not short of oil.
Unprecedented weakness in the US currency has boosted many dollar-denominated commodities and helped fuel oil's rally.
Prices were also buoyed by the Federal Reserve's decision on Wednesday to lower interest rates by a quarter percentage point to reduce the risk of a slowdown in the world's biggest economy.
Rate cuts by the Fed have added liquidity to financial markets by making it cheaper to borrow.
Analysts say some of the extra cash has been drawn to energy markets and contributed to oil's record rally.
Oil in New York has more than quadrupled from below a barrel in early 2002.
REUTERS PDT RN1911