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Wednesday, October 21, 2009

Oil prices pull back after hitting 80 dollars

LONDON, Oct 21, 2009 (AFP) - Crude oil prices fell on Wednesday as investors took profits after a recent rally sent the market above 80 dollars for the first time in one year, analysts said.

Traders meanwhile awaited the latest weekly snapshot of crude inventory levels in the United States, which is the world's biggest energy consuming nation.

New York's main contract, light sweet crude for December delivery, fell 1.04 dollars to 78.08 dollars a barrel.

The November contract, which had expired Tuesday, briefly touched 80.05 dollars -- the highest level for New York crude since October 14, 2008.

Elsewhere on Wednesday, Brent North Sea crude for December delivery was off 84 cents at 76.40 dollars a barrel.

"We are still around 79 bucks so the pull back can hardly be said to be dramatic -- and might have more to do with the fact that we hit a nice round number at 80 dollars," said analyst Simon Denham at Capital Spreads.

A weak dollar and an upbeat mood about the global economic recovery are driving the recent surge in crude prices, according to oil market watchers.

Later Wednesday, at 1430 GMT, the US government's Department of Energy will publish its report on crude oil inventories for the week ending October 16.

Traders will also absorb the latest results from US banking groups Morgan Stanley and Wells Fargo, as well as the US Federal Reserve's Beige Book, which is based on reports from the Fed's 12 districts and used for its policy making.

Despite topping 80 dollars, oil prices finished Tuesday in negative territory after downbeat data from the ailing US property sector.

US housing starts grew in September but the pace was softer than anticipated while permits for construction fell sharply, government data showed.

"Worse-than-expected housing sector data brought to an end the latest rally in prices," wrote analysts at the John Hall Associates energy consultancy in a note to clients.

"Data from the US Commerce Department revealed a less-than-expected increase in the number of housing starts and building permits."

OPEC is meanwhile ready to invest funds to aid the production of oil amid a recovery in energy demand and rising prices for crude, the cartel's chief Abdalla Salem El-Badri had said on Tuesday.

El-Badri, speaking at a London energy conference, also argued that 60-70 dollar oil would not be enough to allow adequate investment levels by OPEC, which pumps 40 percent of the world's oil.

© Copyright AFP 2009.

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