Oil extends retreat from record, Wall St weighs

By Staff
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Google Oneindia News

SINGAPORE, Nov 8 (Reuters) Oil prices pulled further back from the brink of 0 a barrel on Thursday after fresh signs of weak U.S.

oil demand and a Wall Street slump fuelled profit-taking from a near 40 percent rally in under three months.

U.S. crude for December delivery curbed earlier losses to stand 45 cents lower at .92 by 0658 GMT. Oil fell 33 cents on Wednesday, reversing gains that had carried the market to a peak of .62, the latest in a succession of all-time highs.

London Brent crude fell 23 cents to .01 a barrel.

Oil prices have surged since August as a weaker dollar, robust global petroleum demand and tighter oil supplies attracted huge speculative investment, but trade has become increasingly volatile as oil approaches the 0 milestone.

A tumble on Wall Street and further deep losses on Asian stock markets amid fears the subprime mortgage crisis could extend well into next year helped drag oil lower as traders feared diminished demand in the world's top consumer.GLOB] ''The weak stock market will mean weaker oil prices,'' said Jim Ritterbusch, president of Ritterbusch and Associates in Illinois.

Some analysts have said oil could climb above 0 a barrel in the coming days amid expectations that stockpiles in major consumer countries will grow tighter this winter, although U.S. government data on Wednesday tempered those worries slightly.

In the past month, demand for fuel in the United States fell 0.4 percent from a year ago, the U.S. Energy Information Administration said in a weekly report. It also showed crude stocks last week fell by only 800,000 barrels, less than expected, slightly easing concerns over winter supply. S] Gasoline inventories fell by 800,000 barrels but heating oil stocks rose by 600,000 barrels, the data showed.

Oil has also been under pressure from the steady slide in the U.S. dollar, which has lost 7.6 percent of its value against a basket of currencies since mid-August.

Oil has surged by nearly 40 percent over the same period as it grows cheaper for non-dollar investors, and some bet that OPEC nations may aim for a higher oil price to make up for the lost purchasing power of their petrodollar revenues.

''More and more investor money has flowed in to commodities as the dollar has continued to weaken,'' JP Morgan analysts said in a research note. ''These flows have reinforced the on again-off again negative correlation between oil and the dollar and trading the two markets together is back in vogue.'' The dollar hit a record low against the euro on Wednesday and a three-month low against the Japanese yen in early trading on Thursday in Asia.

Oil's surge has taken it near the inflation-adjusted record peak of 1.70 hit in 1980, when war between OPEC producers Iran and Iraq ignited an oil supply crisis, and sounded the alarm bell in consumer nations still reeling from debt market turmoil.

The U.S. government has repeatedly said oil prices are too high and has called on OPEC to boost production to avert a shortage, but the group has been reluctant to increase output further, saying supplies are adequate.

REUTERS AK BD1256

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