LONDON (AFP) — Oil prices fell sharply Thursday as a strengthening dollar and rising US crude stockpiles prompted traders to lock in profits after this week's record-breaking run.
New York's main oil futures contract, light sweet crude for delivery in June, dropped 2.24 dollars to close at 116.06 dollars a barrel. The May contract had struck a record high 119.90 dollars before expiring on Tuesday.
In London, Brent North Sea crude for June delivery on Thursday settled 2.12 dollars lower at 114.34 dollars a barrel after earlier hitting a record intraday peak of 116.87 dollars.
"Crude futures slipped lower, falling under pressure from the recovering greenback," said Sucden analyst Andrey Kryuchenkov.
"It seems that a larger-than-expected increase in US crude inventories during last week and a stronger dollar were good excuses for some investors to book profits."
US crude reserves rose 2.4 million barrels last week, beating market expectations for a 1.5-million-barrel gain.
In the foreign exchange market Thursday, the dollar gained in value against the euro amid speculation the US Federal Reserve soon might end its campaign of cutting interest rates and following a disappointing report on German business confidence.
Two days after the euro crossed 1.60 dollars for the first time, the single European currency was trading below 1.57 dollars.
"The dollar continued to strengthen against the euro, putting some downward pressure on oil prices and correcting after hitting a record low beyond 1.60 dollars against the single currency earlier this week," Kryuchenkov said.
A stronger US currency makes dollar-priced crude more expensive for foreign buyers, tending to discourage demand.
"A rallying dollar has apparently trumped all," said John Kilduff, an energy analyst at MF Global.
"There is an emerging consensus ... that the Federal Reserve should be finished cutting rates after one more quarter point adjustment next Wednesday."
Most analysts expect the Fed to lower its key interest rate by a quarter point at its policy-setting meeting next Tuesday and Wednesday.
However, prices were supported by ongoing supply worries.
Talks aimed at heading off a planned strike at one of Britain's key oil refineries broke down Wednesday, a union spokesman said.
The collapse of discussions between officials from Unite and Ineos, which owns the Grangemouth refinery between Glasgow and Edinburgh, means 1,200 workers at the site will go on strike Sunday and Monday.
Ineos has begun shutting down Grangemouth, the biggest refinery in Scotland, producing 210,000 barrels per day (bpd), and has warned of fuel shortages later this week if the strike goes ahead.
Traders were monitoring production problems in Nigeria, which is the largest crude producer in Africa.
Members of a white-collar union working for Mobil Producing Nigeria (MPN), an affiliate of US oil group ExxonMobil, began an indefinite strike on Thursday over pay and working conditions.
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