Oil Ends Down on Economic Worries
Oil prices eased Thursday, as comments from the U.S. Federal Reserve chairman stirred concerns about the health of the top economy and dragged prices further away from the $100 milestone.
Fed Chairman Ben Bernanke said the U.S. economy has remained resilient in the face of credit market strains but faces risks on both the growth and inflation fronts, sparking a bout of profit taking.
U.S. light, sweet crude on the Nymex settled down, after trading as high as $97.70 earlier.
London Brent crude fell 45 cents to settle at $92.79 per barrel.
Worries over weak U.S. oil demand and falling stock markets have pulled crude down from the record $98.62 a barrel struck Wednesday.
"Word from Fed Chairman Bernanke of risks to U.S. economic growth and inflation helped pull down stocks on Wall Street -- and that set off some profit-taking in the energy markets," said Phil Flynn, analyst at Alaron Trading in Chicago.
Oil rose earlier after bad weather shut production from North Sea fields and a fire shut units at a Texas refinery.
Prices have surged nearly 40 percent in under three months as a weaker dollar, robust global petroleum demand and falling inventories lured huge speculative investment. But trade has become increasingly volatile as it approaches $100.
"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 fell to near record lows against the euro after Bernanke's comments, while U.S. stocks fell sharply.
Analysts have said oil could climb above $100 per barrel in the coming days amid expectations that stockpiles in major consumer countries will grow tighter this winter.
But U.S. oil demand has shown some softness, off 0.4 percent from a year ago, the U.S. Energy Information Administration reported Wednesday. Crude stocks fell by 800,000 barrels last week, less than analyst expectations.
Gasoline inventories fell by 800,000 barrels but heating oil stocks rose by 600,000 barrels, EIA data showed.