NEW YORK (AFP) — Oil prices fell heavily Wednesday as traders reacted to an increase in US crude stocks and as profit-taking occurred a day after prices struck a record high.
New York's main oil futures contract, light sweet crude for June delivery, closed down 1.58 dollars at 124.22 dollars per barrel compared with Tuesday's close.
In London, the benchmark Brent crude contract for June dropped a heftier 2.24 dollars to settle lower at 121.86 dollars.
Prices fell back after the US Energy Information Administration (EIA) reported that American crude oil reserves rose by 200,000 barrels in the week ending May 9. That was less than market expectations of a gain of 2.25 million barrels.
The EIA also said that US gasoline or petrol stockpiles fell by 1.7 million barrels, which was larger than analysts' consensus forecasts for a drop of 200,000 barrels.
New York crude struck a record high of 126.98 dollars a barrel on Tuesday despite new predictions of slower demand growth for energy.
The International Energy Agency cut its forecast for growth in global oil demand.
The Paris-based IEA predicted in a monthly report that crude oil demand in 2008 would stand at 86.8 million barrels per day (bpd) --- about 390,000 bpd less than a previous estimate given in April.
The energy monitoring agency also said it now estimated world oil demand in 2007 at 85.8 million bpd.
"The oil market has been holding steady since it rose yesterday (Tuesday) ... on concerns about distillate tightness in the market," said Victor Shum, an analyst at Purvin and Gertz energy consultancy in Singapore.
Along with an inflow of investor funds, analysts have cited a variety of factors for this year's price spikes, including rising energy demand from Asian powerhouse economies China and India, and OPEC's refusal to pump more crude.
But analysts said the market was also looking overbought as threatened disruptions to Middle East supply have failed to materialize and as militant threats against oil company operations in Nigeria have been priced in to current values.
Rising oil prices have stoked gasoline prices higher, triggering concern that Americans' budgets will be pinched during tougher economic times.
US President George W. Bush will raise the issue of high oil prices and their negative economic impact when he visits Saudi Arabia on Friday, White House spokeswoman Dana Perino said.
Saudi Arabia is the biggest producer in the Organization of the Petroleum Exporting Countries (OPEC), which accounts for about 40 percent of the world's oil.
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