Surging oil prices ease in profit taking
NEW YORK (AFP) — World oil prices eased Friday in late profit taking after a rally Thursday supported by concerns over the murder of Pakistani opposition leader Benazir Bhutto and tight US energy reserves.
New York's main contract, light sweet crude for February, fell 62 cents to close at 96.00 dollars per barrel. It earlier struck a one-month high of 97.92 dollars -- just 1.37 dollars away from the record 99.29 dollars hit in November.
The New York futures contract has climbed nearly three dollars over the course of four sessions in the Christmas holiday-shortened week.
In London, Brent North Sea crude for February delivery dropped 90 cents to settle at 93.88 dollars after hitting a one-month peak of 95.86 dollars.
Crude futures earlier had extended Thursday's gains after former Pakistani prime minister Bhutto was assassinated by a suicide bomber on Thursday.
Dealers said Bhutto's killing, which plunged the nation into crisis and sparked global condemnation and concern, would have a psychological impact on the market even though the country is not an oil producer.
"Should the geopolitical upheaval triggered by the Bhutto assassination spin out of control and lead to destabilizing antigovernment demonstrations, Pakistan will become a key bullish prop for the market," said MF Global analyst Ed Meir.
"This is not because of any oil-related ramifications, but because of the shaky ground the existing and relatively pro-Western regime will find itself in," he added.
Trade was thin, with many investors away for the New Year holiday, and geopolitical tensions helped drive prices higher, analysts said.
Traders were concerned over the security to supply amid escalating tension in crude-rich northern Iraq. On Wednesday, Turkish warplanes launched the third cross-border attack in 10 days on Kurdish guerrillas in northern Iraq.
Prices were also bolstered on Friday by huge drawdowns in US crude oil inventories.
"Oil pushed back up towards the all-time highs on the back of a bullish weekly US fuel report and as further geopolitical risk premium was added to prices following the assassination of Benazir Bhutto," said Sucden analyst Nimit Khamar in London.
The US Department of Energy's weekly energy report, released Thursday, showed American crude reserves tumbled by 3.3 million barrels to 293.6 million barrels in the week ended December 21.
That marked the sixth weekly decline in a row and was almost double market expectations of a 1.75-million-barrel drop.
US energy reserve levels are a major concern because the United States is the world's biggest energy consumer.
Tetsu Emori, a fund manager with Astmax asset management in Tokyo, added that the market could also expect a fresh inflow of funds beginning around the New Year period.
"So I think the market situation should be more steady," he said. "It's quite supportive."
