LONDON (AFP) — Oil prices fell on Thursday as the dollar strengthened and after a five-dollar gain in response to a US government report that showed American crude reserves dipped for a fourth week running.
New York's main oil futures contract, light sweet crude for July delivery, dropped 1.48 dollars to 134.90 dollars per barrel.
"Oil futures are lower as the dollar strengthened ... amid expectations that a rebound in US retail sales will increase the chances of a rate rise in the US," said Sucden analyst Nimit Khamar in London.
"Oil markets have been increasingly influenced by the dollar over the past year, as market participants have been using dollar-denominated commodities as a hedge against inflation and their dollar exposure."
A stronger US currency makes crude priced in dollars more expensive for foreign buyers.
The New York oil contract had rocketed by 5.07 dollars to a close of 136.38 dollars on Wednesday after publication of the US inventory report.
"It could be a volatile time," said David Moore, a commodities strategist at the Commonwealth Bank of Australia, commenting on the reversal of prices on Thursday.
"You've got to wonder, did it overshoot a bit? Or is there more to come?"
There may be fluctuations but the overall near-term trend is higher, Moore said.
"I think the mood of the market right at the moment has become more bullish overnight," he added.
New York crude had struck a historic high 139.12 dollars last Friday, when it won a record-breaking 10.75 dollars in one day's trade.
On Thursday, Brent North Sea crude for July delivery declined 1.27 dollars to 133.75 dollars, after hitting a historic peak of 138.12 last Friday.
Wednesday's surge in prices came after the US government said American crude stockpiles declined by 4.6 million barrels in the week ending June 6.
That was far heavier than market expectations for a drop of 1.5 million barrels and marked the fourth straight weekly fall.
Moore said prices were supported by the latest US data but also by news of a planned June 22 meeting of the world's biggest oil producers and consumers to discuss skyrocketing crude prices.
The meeting, to take place in Jeddah, Saudi Arabia, will be at head-of-state level. British Prime Minister Gordon Brown confirmed his attendance on Thursday.
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